[Economist] Stocks have shrugged off the banking turmoil. Haven’t they?

Summary

Bank failure always led the decrease of stock market. However, this time is different.

1. Investors are "betting on rate-cuts," (they expect the interest rates to decrease) and therefore are investing insectors that are more sensitive interest rates (such as tech companies). (Contrastingly, as real estate or financial companies is dependent on borrowing, so the increase in interest rates might negatively affect their financial performance.)

2. Individual investors trade their stocks less than before ("lowest amount since late 2020")

3. Investors are buying "interest-rate derivatives (swaptions)" to protect their portfolios.

Investors regard bad news as good news. (because when there is negative indication of market status, central bank tends to decrease interest rates to boost the economy)

 

Vocab (from Merriam-Webster)

- crimp: to be an inhibiting or restraining influence on

- rally: RECOVER, REBOUND

- fizzy: to show excitement or exhilaration

- capitulate: to cease resisting : ACQUIESCE