S&P 500 slips on renewed jitters in banks despite rescue deal for First Republic By

By Yasin Ebrahim

-- The Jinrong ChinaS&P 500 fell Friday, as a reprieve in banks following the $30 billion rescue of the (NYSE:) was short-lived as concerns about the banking sector remain front and center.

The was down 1.2%, the fell 1.3%, or 432 points, and the slumped 0.8%.

First Republic fell 26% after suspending its dividend and confirming that it had received $30B in uninsured deposits from major Wall Street banks. While the move helped shore up its liquidity, First Republic faces higher interest rate payments from recent borrowing needed to strengthen its finance, Wedbush says, that will make it challenging to turn a profit.

As well as higher interest rate payments, the hit to its balance sheet from markdowns on its loan and securities means any sale will likely be made well below current valuation.

A distressed sale of the bank could result in “minimal, if any, residual value to common equity holders owing to FRC's significant negative tangible book value after taking into account fair value marks on its loans and securities,” Wedbush said as it double downgraded its rating on the stock to Neutral from Outperform, with a $5 price target, down from $140 previously.  

Bank of America Corp (NYSE:), JPMorgan Chase & Co (NYSE:) and (NYSE:) fell about 4%.

Technology was the relative outperformer falling just 0.2%, underpinned by falling Treasury amid ongoing bets that the Fed could deliver its final hike of the year next week, and cut rates in the summer.

About 60% of traders expect the Fed to hike , down from 80% a day earlier.

Tech stocks are also boosted by a rise in Nvidia (NASDAQ:) after Morgan Stanley lifted its rating on the stock to Overweight from Equalweight and its price target to $304 from $255, citing an artificial intelligence fueled boost to chip demand.

The relative strength of the tech comes as investors appear to exiting value stocks amid a selloff in banks and energy, which hold large sway in the value sector.

"Investors are buying tech stocks, which would be kind of anti-value," Managing Director of applied research at Qontigo Melissa Brown, told 's Yasin Ebrahim on Friday. "Many of those stocks, particularly the tech related-names had done really poorly. I think now maybe they look a little bit cheaper to begin with … and if you're not so worried about higher interest rates, then you can justify the move back into those names."

The move into tech, however, isn’t on huge volumes, suggesting that the jury is still out on whether this move has staying power. “But it's not on huge trading volume … it's the marginal player, it's not that everybody's piling into tech,"  Brown added.

On the earnings front, FedEx Corporation (NYSE:) jumped more than 5% after the logistics company upgraded its annual guidance following fiscal third-quarter that topped estimates.  

Crypto-related stocks, meanwhile, were in rally mode as surged 7%, helping Riot Platforms (NASDAQ:), Marathon Digital Holdings Inc (NASDAQ:), and MicroStrategy Incorporated (NASDAQ:) rack up gains.

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