Stocks fell on Wall Street on Wednesday as concerns about the strength of banks worsen on both sides of the Atlantic Ocean. The S&P 500 was down 1.4% in early trading, while markets in Europe tumbled further as shares of Switzerland’s Credit Suisse fell to a record low. The Dow Jones industrial average and the Nasdaq composite also fell sharply at the open. Credit Suisse shares plunged after reports that its largest shareholder will not inject more money into the bank. Three recent US bank failures have investors on edge, and the Credit Suisse news triggered further selling of bank shares in both the US and Europe.
THIS IS A LAST MINUTE UPDATE. The previous AP story follows below.
US futures fell on Wednesday and bank stocks around the world tumbled as anxiety over the health of the global banking system resurfaced with new potential problems emerging at Europe’s Credit Suisse.
Futures for the benchmark S&P 500 index fell 1.7% and the Dow Jones industrial average fell 1.6% before the bell.
Large and midsize banks in Europe and the US collapsed sharply before the US markets opened up, especially in Europe. Major European banks fell between 5% and 10%, although Switzerland’s Credit Suisse slid almost 25% to record lows. That decline comes after media reports that representatives of the National Bank of Saudi Arabia said they could not shore up their investments in Credit Suisse, citing regulatory concerns.
Confidence in the banking system has eroded in a matter of days following the bankruptcies of Silicon Valley Bank on Friday and Signature Bank on Sunday.
Most of the pre-market declines in the S&P 500 early Wednesday were regional banks, with Zion Bancorporation, KeyCorp, Commerce and Regions all falling between 5% and 8%. The largest banks also lost ground, with Wells Fargo, Bank of America and Citigroup falling between 3% and 4%.
Banks have struggled for most of the year as higher interest rates mean fewer people and businesses are borrowing, part of the Federal Reserve’s aim to cool the economy and reduce high four-year inflation. decades.
Investors returned to the bond market on Wednesday, sending yields lower again after they rallied a bit the day before. The 2-year yield fell again to 4.05% from 4.25% on Tuesday night, and the 10-year yield fell to 3.53% from 3.69%.
Shares rose on Tuesday after the government said consumer prices slowed from the previous month, largely in line with analysts’ expectations. The data showed that core inflation, with volatile energy and food prices excluded to show a clearer trend, was 0.5% in February from the previous month, surpassing the 0.4% increase in January. . The Fed pays close attention to underlying inflation when deciding on monetary policy.
Investors fear that the Fed may respond to persistent upward pressure on prices by accelerating the pace of interest rate hikes to curb economic activity and inflation.
He The Fed faces a dilemma on how to respond when banks are already under pressure after the fastest pace of rate hikes in a decade plunged their asset prices.
President Joe Biden and regulators have tried to reassure the public that risks are contained and that deposits at other banks are safe.
Later Wednesday, the government reports retail sales, giving the Fed more data to crunch ahead of its meeting next week, where the central bank will decide whether or not to raise its main lending rate for the ninth time. consecutive.
In European trade, the FTSE 100 in London fell 2.4% at midday, the DAX in Frankfurt fell 2.8% and the CAC 40 in Paris fell 3.4%.
In Asia, the Shanghai Composite Index rose 0.6% to 3,253.31 after Chinese economic activity picked up in January and February, but less than expected after the end of anti-virus checks.
Tokyo’s Nikkei 225 rose less than 0.1% to 27,229.48 after major Japanese companies announced they had agreed with unions to the biggest pay rises in nearly two decades. Low wages are seen as a major drag on economic growth in Japan, but fewer than one in five workers belong to a union.
Hong Kong’s Hang Seng jumped 1.5% to 19,539.87. The Kospi in Seoul rose 1.3% to 2,379.72.
India’s Sensex lost 0.2% to 57,783.79. The New Zealand and Southeast Asian markets advanced.
In energy markets, benchmark US crude fell $1,039 to $70.24 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell $3.47 on Tuesday to $71.33. Brent crude, the price basis for international oil trading, lost $1.19 to $76.26 a barrel in London. It lost $3.32 the day before at $77.45.
The dollar fell to 133.52 yen from 134.19 yen on Tuesday. The euro fell to $1.0594 from $1.0741.
On Tuesday, the S&P 500 rose 1.7% and the Dow Jones 1.1%. The Nasdaq Composite added 2.1%.
McDonald’s reported from Beijing; Ott reported from Silver Spring, Maryland.
