: Moody’s cuts outlook on bank sector to negative from stable

Moody’s Investors Service on Tuesday downgraded the U.S. banking system to negative from stable. The rating agency said the move reflects “the rapid deterioration in the operating environment” following deposit runs and failures of Silicon Valley Bank, Signature Bank and Silvergate Bank. “Although the Department of the Treasury, Federal Reserve and FDIC announced that all depositors of SVB and Signature Bank will be made whole, the rapid and substantial decline in bank depositor and investor confidence precipitating this action starkly highlight risks in U.S. banks’ asset-liability management exacerbated by rapidly rising interest rates,” Moody’s said. Bank stocks mostly rebounded on Tuesday after sharp losses, with the Financial Select SPDR ETF XLF up by 2.6% and the KBW Nasdaq Bank Index BKX up by 5.1%.

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