Stocks Down On Friday And For The Week After Employment Report And Bank Closure _top_1010_565x377.jpg) Image: Bigstock Stocks closed lower on Friday and for the week after another strong jobs report. But really, I think it was the implosion of Silicon Valley Bank that tanked stocks on Friday. More on that in a bit. Friday's Employment Situation report showed the economy created 311,000 new jobs in February (265K in the private sector and 46,000 in the public), vs. the consensus for 223,000 (213K in the private sector and 10K in the public). The unemployment rate rose to 3.6% vs. last month's 3.4%. And wages rose 0.2% m/m vs. views for 0.3%, while they were up 4.6% y/y vs. views for 4.7%. All in all, it was a fine report. Job growth remains robust, but has eased since January. The unemployment rate ticked up more than expected. We're still at decades lows, but it ticked up nonetheless. And wage inflation cooled in the latest month. Quite frankly, that's a pretty good report. And it shows there's plenty of room in the economy, specifically the jobs market, to absorb higher rates without plunging into a recession. The biggest job gains came from: Leisure and Hospitality with 105,000 new jobs; Retail Trade with 50,000 new jobs; Government Employment increased by 46,000; Professional and Business Services increased by 45,000; Health Care was up 44,000; Construction gained 24,000; and Employment in Social Assistance was up 19,000 jobs. Interestingly, Information Services lost -25,000 jobs; Transportation and Warehousing lost -22,000 jobs; Manufacturing shed -4,000; and Financial Activities lost -1,000 jobs. The bigger news, however, was the collapse of Silicon Valley Bank. After losing -60% on Thursday, trading was halted on Friday. (The last ask suggested it was ready to plunge another -60%, which would have put it down by more than -86% for the week.) Heath Care (particularly biotech), and tech stocks fell as word that SVB was being shut down by regulators and taken over by the Federal Government. Since SVB was a large financier of tech and health care startups, there was concern what that would mean to those industries. But, aside from venture-backed companies, other reports suggested that small and mid-cap biotech companies had little exposure to SVB. Either way, as the news got worse for SVB as the day wore, more and more stocks fell across the board. That includes financial stocks, both big and small, as the fear of contagion spooked investors. (They were the 16th-largest bank in the U.S.) But SVB's situation looks specific to them. The big banks are in a relatively strong financial position. SVB's problem stemmed from the startup market cooling off, investor deposits drying up, interest rates going up, which in turn saw their loan/bond portfolio going down. If it turns out that SVB's situation is unique to them (which it sure looks like it is), and this will not spill over to other banks, the panic selling in response to SVB, and possible ripple effects, could look way overdone. We will have to see how this shakes out. But stocks are looking very oversold. And if Tuesday's upcoming CPI report shows better than expected inflation numbers (same goes for Wednesday's PPI numbers), stocks could be in for a sharp rebound. Either way, it was another tough week for the markets last week. But if you're expecting more upside to come this year, the recent pullback might just be a great opportunity for those looking to beef up their long positions. Should be another busy day today. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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