Wall Street Wavers on Bank Worries     03/24 12:54

   Stocks are wavering on Wall Street Friday amid worries about banks on both 
sides of the Atlantic.

   NEW YORK (AP) -- Stocks are wavering on Wall Street Friday amid worries 
about banks on both sides of the Atlantic.

   The S&P 500 was 0.2% higher in afternoon trading after slipping for most of 
the morning. The Dow Jones Industrial Average rose 53 points, or 0.2%, at 
32,162, as of 1:40 p.m. Eastern time, while the Nasdaq composite was 0.1% lower.

   Markets have been turbulent on worries that banks are weakening under the 
pressure of much higher interest rates. That's led to rising concerns about a 
possible recession and heavy uncertainty about what the Federal Reserve and 
other central banks will do with interest rates going forward.

   On Friday, much of the focus was on Deutsche Bank, whose stock tumbled 8.5% 
in Germany. Earlier this month, shares of and faith in Swiss bank Credit Suisse 
fell so much that regulators brokered a takeover of it by rival UBS.

   Credit Suisse faced a relatively unique set of longstanding troubles. But 
the second- and third-largest U.S. bank failures in history earlier this month 
have cast a harsher spotlight across the entire banking industry.

   Other big European banks also fell Friday, including a 5.5% drop for 
Germany's Commerzbank, a 5.3% fall for France's BNP Paribas and a 3.5% loss for 
UBS.

   Bank stocks were mixed on Wall Street, including a 1.4% drop for JPMorgan 
Chase and a 0.8% gain for Bank of America.

   In the U.S., the hunt by investors has primarily been for banks that could 
face a debilitating exodus of customers, similar to what helped cause the 
failures of Silicon Valley Bank and Signature Bank.

   Investors have zeroed in on smaller and midsized banks, the ones below in 
size of the "too-big-to-fail" banks and seen as greater risks.

   First Republic Bank was mostly unchanged.

   Treasury Secretary Janet Yellen has said that in cases where the government 
sees a risk to the overall system, it will guarantee deposits for bank 
customers, even those with more than the $250,000 insured by the Federal 
Deposit Insurance Corp. That's what regulators did for both Silicon Valley Bank 
and Signature Bank.

   But Yellen this week also stopped short of a blanket guarantee for all 
depositors at all banks.

   Cash-short banks were still lining up this week to borrow money from the 
Fed. The Fed said Thursday that emergency lending to banks fell slightly in the 
past week -- to $164 billion -- but remained high.

   A big worry is that all the pressure on banks will cause a pullback in 
lending to small and midsized businesses across the country. That in turn could 
lead to less hiring, a weaker economy and a higher potential for a recession 
that many economists already saw as likely.

   While the job market has remained remarkably solid, other parts of the 
economy have already begun to weaken under the weight of higher rates. On 
Friday, reports on the economy came in mixed. One showed orders for 
long-lasting manufactured goods were slower last month than economists expected.

   A second report, though, suggested the fastest uptick in business activity 
for almost a year. The preliminary report from S&P Global topped economists' 
expectations.

   Federal Reserve Chair Jerome Powell said worries about a pullback in lending 
helped push the Fed to raise rates by only a quarter of a percentage point this 
week, instead of a more aggressive half point, in its campaign to battle 
inflation.

   Higher rates can undercut inflation by slowing the entire economy, but they 
raise the risk of a recession. They also hurt prices for stocks and other 
investments. For Silicon Valley Bank and other banks, that meant hits to the 
super-safe Treasury bonds they owned.

   The Fed has raised its key overnight interest rate to a range of 4.75% to 
5%, up from virtually zero at the start of last year. It's hinted it may raise 
rates one more time before holding them there through the end of the year.

   Traders are more skeptical, though. The rising possibility of a recession 
has them betting heavily that the Fed will have to cut interest rates as soon 
as this summer to release some of the pressure on banks and the economy.

   Such speculation has added to an increased drive by investors to pile into 
anything seen as safe, which together have caused huge, sometimes violent 
swings in the bond market.

   On Friday, yields fell further. The 10-year yield, which helps set rates for 
mortgages and other loans, fell to 3.37% from 3.42% late Thursday. It was above 
4% earlier this month.

   The drop has been even more dramatic for the two-year Treasury yield, which 
more closely tracks expectations for the Fed. It sank to 3.78% from 3.83% late 
Thursday and from more than 5% earlier this month.