Shares of banks and other financial institutions were more or less flat as a rout in private-credit firms slowed.
Shares of Blue Owl slid in early trading, but swung into the green shortly before the closing bell, with similar patterns in shares of Blackstone, Ares Management and other rivals.
Blue Owl shares are getting more costly to borrow for short-sellers but are still widely available, said Ihor Dusaniwsky, managing director at short-side research firm S3 Partners.
Goldman Sachs Group and JPMorgan are facilitating short bets against the private-credit market for hedge fund clients, Bloomberg reported.
One strategist said pressure on private-credit firms will rise alongside interest rates.
"'When the tide goes out, you see who has been swimming naked,'" said Lawrence Gillum, chief fixed income strategist at brokerage LPL Financial, quoting Warren Buffett.
"With traditional safe assets offering near-zero returns, institutional investors (including insurers) piled into higher yielding alternative assets like private credit, enabling looser underwriting, higher leverage in some deals and rapidly growing AUM," Gillum said.
Gillum expects defaults on the direct loans to the software sector and elsewhere to rise, but does not view the risk as "systemic."
Europe's top central bankers warned that the escalating war in the Middle East would drive up inflation and knock growth.
America's biggest banks would be allowed to hold billions of dollars less in capital on their books under proposals unveiled Thursday, easing rules put in place after the 2008 financial crisis that were meant to help shield against meltdowns.
Write to Rob Curran at rob.curran@dowjones.com
(END) Dow Jones Newswires
March 19, 2026 17:16 ET (21:16 GMT)
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