- Feb Retail Sales, Producer Inflation Decline
- Credit Suisse US stocks hit record low
- Regional bank stocks fall
- Indices down: Dow 1.82%, S&P 1.55%, Nasdaq 0.88%
NEW YORK, March 15 (Portal) – US stocks fell sharply on Wednesday as turmoil at Credit Suisse reignited fears of a banking crisis and eclipsed bets of a lower US rate hike in March after weak economic data.
Credit Suisse’s troubles put pressure on the banking sector, undiding relief from emergency measures taken by US authorities to prevent contagion following the collapse of SVB Financial (SIVB.O) and Peer Signature Bank (SBNY.O).
Some investors believe aggressive US interest rate hikes by the Federal Reserve have caused cracks in the financial system.
“They have been tightening at the steepest and most dramatic rate since 1980 and so I think this could be their opportunity to take a break,” said Jack Ablin, CIO of Cresset Capital.
US-listed shares of Credit Suisse hit a record low after its biggest investor said it could not provide the bank with more funding, prompting a flight from European lenders and also putting pressure on US banks.
last update
Watch 2 more stories
“Anything negative from a highly visible institution, in this case Credit Suisse, will spread throughout the financial sector,” said Michael James, managing director of equities trading at Wedbush Securities.
Data showed that US retail sales fell 0.4% last month after growing 3.2% in January. Economists polled by Portal had expected a 0.3% decline.
A separate report showed that US producer prices fell unexpectedly in February, offering some hopeful signs in the fight against inflation, a day after another gauge showed moderation in consumer inflation last month.
This fueled investor hopes that the Fed might be slowing rate hikes. US Treasury yields fell and traders are now expecting an equal chance of a 25 basis point rate hike and a pause at the March Fed meeting.
First Republic Bank (FRC.N) fell 18.82%, while PacWest Bancorp (PACW.O) fell 18.46%. Trading was halted several times due to volatility a day after struggling banks’ stocks rallied sharply.
Shares of Western Alliance Bancorp (WAL.N) rose 8.84% and banking and brokerage firm Charles Schwab Corp (SCHW.N) rose nearly 3.99%. Both stocks reversed early declines.
“In financial markets, you just have to look at those who could survive and don’t have as much investment risk in their portfolio,” said Jeffrey Carbone, managing partner at Cornerstone Wealth.
Big US banks like JPMorgan Chase & Co (JPM.N), Citigroup (CN) and Bank of America Corp (BAC.N) fell between 1% and 6%.
The KBW Regional Banking Index (.KRX) fell 2.28%, while the S&P 500 Banking Index (.SPXBK) fell 4.13%.
Most of the 11 major S&P 500 sectors were down, with energy (.SPNY) down 5.86% to lead the declines.
The Dow Jones Industrial Average (.DJI) fell 513.75 points, or 1.6%, to 31,641.65, the S&P 500 (.SPX) lost 56.26 points, or 1.44%, to 3,863.03 and the Nasdaq Composite (.IXIC) fell 85.52 points, or 0.75%, to 11,342.63.
Relative to the Dow (.DJI), Boeing Co (BA.N) shed 5.73% a day after the company said its aircraft deliveries fell in February.
Declining issues predominated on the NYSE at a 4.81 to 1 ratio; on the Nasdaq, a 3.05 to 1 ratio favored losers.
The S&P 500 posted 1 new 52-week high and 35 new lows; The Nasdaq Composite posted 10 new highs and 344 new lows.
Reporting by David Carnivale; Editing by David Gregorio
Our standards: The Trust Principles.