Wall Street Plummets as Credit Suisse Raises Fresh Concerns for the Banking Sector
In a devastating turn of events, Wall Street has opened to a sea of red as Credit Suisse’s latest crisis adds more pressure to an already beleaguered banking sector. At the time of writing, the Dow Jones Industrial Average has plummeted a staggering 428 points, or 1.3%, while the S&P 500 and NASDAQ Composite are down 1.3% and 0.9%, respectively.
Credit Suisse Group (NYSE:CS) has taken the biggest hit, with its shares plunging a jaw-dropping 23%. This drastic downturn comes after the National Bank of Saudi Arabia, a major investor in Credit Suisse, announced that regulations prevented it from providing the bank with further financial assistance. This has only added fuel to the fire of an already tumultuous time for the banking giant.
Furthermore, new economic data has only added to the woes of Wall Street, fueling hopes of a less hawkish Federal Reserve. Retail sales in February contracted by a larger-than-expected 0.4%, following January’s 3.2% increase. Meanwhile, producer prices rose by only 4.6% on the year in February, versus expectations for a 5.4% increase. This has left futures traders split on the Fed’s next move, with only half betting that there will be no interest rate action next week, while the other half believe that the central bank will hike rates by a quarter of a percentage point, according to the CME’s FedWatch tool.
Bank stocks that had rallied somewhat on Tuesday after Monday’s sudden collapse of SVB Financial Group (NASDAQ:SIVB) and Signature Bank (NASDAQ:SBNY) have come crashing down once again. Regional banks like First Republic Bank (NYSE:FRC), Western Alliance Bancorporation (NYSE:WAL), and PacWest Bancorp (NASDAQ:PACW) have been hit the hardest, with shares falling 7.4%, 6.3%, and 17.8%, respectively. Even big banks like JPMorgan Chase & Co (NYSE:JPM) and Bank of America Corp (NYSE:BAC) have taken a beating, with shares down 3.8% and 3.4%, respectively.
Adding to the overall gloom and doom, oil futures have taken a nosedive as well, with WTI crude futures registering a sharp drop of 3.6% at $68.77 a barrel, while Brent futures fell by 3.4% to $74.80 a barrel. The only ray of hope in this sea of red is that gold futures have risen by 0.8% to $1,927.
As the market reels from these successive blows, it’s clear that there are dark days ahead for Wall Street and the banking sector. Only time will tell if they can weather this storm or if it will be the final nail in the coffin for the industry.
