The Federal Reserve on Friday declined to extend a pandemic-era rule that relaxed the amount of capital banks had to maintain against Treasurys and other holdings, in a move that could upset Wall Street and the bond market.
 | FRI, MAR 19, 2021 | | | | DOW | | NAME | LAST | CHG | %CHG | | AAPL | 119.99 | -0.54 | -0.45% | | CSCO | 48.98 | +0.18 | +0.37% | | KO | 50.81 | +0.24 | +0.47% | |
| | S&P 500 | | NAME | LAST | CHG | %CHG | | AAPL | 119.99 | -0.54 | -0.45% | | BAC | 38.53 | -0.41 | -1.05% | | F | 12.83 | +0.34 | +2.72% | |
| | NASDAQ | | NAME | LAST | CHG | %CHG | | AAPL | 119.99 | -0.54 | -0.45% | | CSCO | 48.98 | +0.18 | +0.37% | | INTC | 63.76 | +0.04 | +0.05% | |
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The Federal Reserve decided Friday to not extend a Covid pandemic-era capital break for banks, stoking a bounce in bond yields and a sell-off in financial stocks. The central bank said it will let a rule expire at the end of the month that relaxed the supplementary leverage ratio for banks during the pandemic. The regulation allowing banks to hold less capital against Treasurys and other holdings was implemented to calm the bond market during the crisis and encourage banks to lend.  "The big fear is that some banks might resist lending because they might struggle putting more capital aside," said Edward Moya, senior market analyst at Oanda. "Wall Street is closely going to follow the upcoming Treasury auctions and if bank interest is low, the bond market sell-off could intensify." Bank stocks sold off in unison after the Fed's announcement, leading the Dow Jones Industrial Average lower. JPMorgan closed 1% lower. The stocks got a lift earlier this week from rising rates and most of the bigger names have all rallied by double digits this year. The major averages suffered a slightly losing week. The S&P 500 and the Nasdaq Composite both dropped 0.8% this week. The Dow dipped 0.5%. |
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