S&P 500 ends nearly flat as banks warn of losses

The S&P 500 ended nearly flat on Monday, with bank shares falling amid warnings of potential losses - to the tune of billions of dollars - from a hedge fund's default on margin calls.

Still, optimism over the economy limited the day's declines with the Dow rising roughly 100 points while the S&P slipped and the Nasdaq fell.

Nomura and Credit Suisse face billions in losses after a U.S. investment fund, named by sources as Archegos Capital, defaulted on margin calls, putting investors on edge about who else might have been caught in the situation.

Susan Schmidt - Aviva Investors' head of U.S. equities - says so far this is a contained event.

"Everyone immediately jumps to concerns over the ripple effect, how does this ripple through the rest of the market. Right now we do seem to think this is an isolated event. You're going to have interim dislocation but things should right themselves and that's because we have a contained event. We have a hedge fund that was highly leveraged and we're seeing positions unwind as a result."

Media companies such as Discovery, ViacomCBS plus the U.S.-listed shares of Baidu, all linked to Archegos, ended lower, extending recent losses.

Meanwhile shares of planemaker Boeing rose - helping lift the Dow - after the company said on Monday it sold 100 new 737 MAX-7 jets to long-time customer Southwest Airlines, in its biggest order win since the aircraft's safety ban was lifted in the U.S. last year.

Video Transcript

- The S&P 500 ended nearly flat on Monday, with bank shares falling amid warnings of potential losses to the tune of billions of dollars from a hedge fund's default on margin calls. Still, optimism over the economy limited the day's declines, with the Dow rising roughly 100 points while the S&P slipped and the NASDAQ fell.

Nomura and Credit Suisse are facing billions in losses after a US investment fund, named by sources as Archegos Capital, defaulted on margin calls, putting investors on edge about who else might have been caught in the situation. Susan Schmidt, Aviva Investors head of US equities, says so far, this is a contained event.

SUSAN SCHMIDT: Well, everyone immediately jumps to concerns over the ripple effect. How does this, then, ripple through the rest of the market? What are the impacts and implications of this? Right now, when you look at it, we do seem to think that this is just an isolated event. You're going to have interim dislocation, but things should right itself. And that's because we've had a contained event. We've had a hedge fund that was highly levered. We're seeing positions unwind as a result.

- Media companies such as Discovery, Viacom CBS, plus the US-listed shares of Baidu, all linked to Archegos, ended lower, extending recent losses. Meanwhile, shares of plane maker Boeing rose, helping lift the Dow after the company said on Monday it sold 100 new 737 MAX 7 jets to longtime customer Southwest Airlines in its biggest order win since the aircraft safety ban was lifted in the US last year.