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* FedEx jumps as profit soars on pandemic-fueled demand
* Banks drop as Fed to let leverage exemption expire
* Nike falls as sales miss estimates
* Indexes: Dow down 0.8%, S&P dips 0.3%, Nasdaq up 0.3%
(Adds comment, details; updates prices)
By Shashank Nayar and Medha Singh
March 19 (Reuters) - The S&P 500 and the Dow dropped on
Friday with banks leading the way after the U.S. Federal Reserve
said it would not extend a temporary capital buffer relief put
in place to ease a pandemic-driven stress in the funding market.
The S&P 500 bank stocks .SPXBK shed about 3% as the Fed's
move means banks will have to resume holding an extra layer of
loss-absorbing capital against U.S. Treasuries and central bank
deposits from next month. "Banks have had such a significant up move this year and
this news has only acted as a catalyst for profit taking," said
Art Hogan, chief market strategist at National Securities in New
York.
"It's one of those days when we see a great deal of volume
and volatility and we might see things change back on Monday."
Market trading volumes and liquidity are expected to rise on
Friday due to "quadruple witching," the quarterly simultaneous
expiration of U.S. options and futures contracts.
Yield on U.S. 10-year notes US10YT=RR , which has risen
sharply in the past seven weeks on growth expectations, hovered
near a 14-month peak at $1.742%. US/
Optimism over a $1.9 trillion fiscal package and the Federal
Reserve's promise to maintain its ultra-loose policy stance for
years has accelerated a shift into economy-linked stocks,
powering the S&P 500 and the Dow to record levels this week.
However, the Nasdaq is still about 6% below its Feb. 12
all-time closing high as technology and high-growth stocks have
lost favor, with their valuations looking expensive with a jump
in yields.
"There is not much of a reason to justify this minor
pullback as downside risks have come down significantly and the
market is looking at how quickly the economy can reach pre-COVID
levels," said Jeff Powell, managing partner at Polaris Wealth
Advisory Group in California.
Several bond managers believe the recent pace of the rise in
yields has been unsettling and also worry the market could be
viewed as disorderly if the momentum continues. At 11:31 a.m. ET, the Dow Jones Industrial Average .DJI
fell 270.66 points, or 0.82% , to 32,591.68, the S&P 500 .SPX
lost 12.31 points, or 0.31%, to 3,903.14 and the Nasdaq
Composite .IXIC gained 38.42 points, or 0.29%, to 13,154.55.
Shares of Facebook (NASDAQ:FB) rose 4.1%, providing the biggest boost to
the Nasdaq, after Business Insider reported that Chief Executive
Officer Mark Zuckerberg said Apple's imminent privacy policy
changes on ad sales would leave the social network in a
'stronger position'.
"Apple's changes encourage more businesses to conduct
commerce on our platforms," Zuckerberg was quoted as saying on a
Clubhouse discussion.
FedEx Corp FDX.N jumped 6.2% after the U.S. delivery firm
said quarterly profit jumped more than expected on higher prices
and surging volume from pandemic-fueled e-commerce deliveries
during the holiday shipping season. Nike Inc NKE.N shed 4% after the company missed quarterly
sales estimates due to shipping issues and a pandemic-related
slump at brick-and-mortar stores. Declining issues outnumbered advancers by a 1.1-to-1 ratio
on the NYSE and by a 1.3-to-1 ratio on the Nasdaq.
The S&P 500 posted eight new 52-week highs and no new low,
while the Nasdaq recorded 60 new highs and 66 new lows.