U.S. equity markets traded higher Sunday afternoon, in the aftermath of the failure of Silicon Valley Bank SIVB, -60.41% on Friday, as regulators unfurled a batch of measures to help limit the fallout from the second-largest bank failure in U.S. history and the first since the 2008-09 financial crisis.
In a joint statement on Sunday, regulators, including Treasury Secretary Janet Yellen, Federal Reserve Chair Jerome Powell and Federal Deposit Insurance Corp. Chair Martin Gruenberg, said that depositors at SVB Financial Group, the parent of SVB, will have access to all of their money on Monday.
“After receiving a recommendation from the boards of the FDIC and the Federal Reserve, and consulting with the president, Secretary Yellen approved actions enabling the FDIC to complete its resolution of Silicon Valley Bank, Santa Clara, Calif., in a manner that fully protects all depositors,” a joint statement said.
SVB’s failure on Friday cast a pall over the banking sector and threatened to have a lasting impact on market sentiment. Futures for the Dow YM00, 1.26% were up sharply, as were those for the S&P 500 ES00, 1.74%, while those for the Nasdaq-100 futures NQ00, 1.74% were also rising solidly.
Over the weekend, the FDIC was holding an auction for the assets of failed SVB, according to reports.
The Fed also said it would make additional funding available to banks to ensure they have “the ability to meet the needs of all depositors” through a new “Bank Term Funding Program,” which will offer loans of up to one year to banks that pledge U.S. Treasury securities, mortgage-backed securities and other collateral.
Investors are assessing the SVB bank failure to see if it complicates the Fed’s plans to raise interest rates further and potentially faster than previously expected in its bid to tamp down inflation.
On Friday, the Dow Jones Industrial Average DJIA, -1.07% saw a 4.6% weekly fall, while the Nasdaq Composite COMP, -1.76% declined 4.7%. Investors sold stocks but piled into safe-haven U.S. Treasurys TMUBMUSD10Y, 3.688%, prompting a sharp retreat in yields, which move opposite to prices.
The moves by regulators on Sunday were in conjunction with the closure of Signature Bank. The New York crypto-friendly bank’s depositors will be made whole, regulators also announced.