Wall Street Pares Big Losses Before Closing Bell

Fears of global banking crisis shook markets
By Newser Editors and Wire Services
Posted Mar 15, 2023 3:53 PM CDT
Fears of Global Banking Crisis Shake Markets
A sign displays the name of Credit Suisse on the floor at the New York Stock Exchange in New York, Wednesday, March 15, 2023.   (AP Photo/Seth Wenig)

Stocks fell Wednesday amid fresh worries about the banking sector, although Wall Street more than halved its losses by the closing bell. The S&P 500 fell 27.36 points, or 0.7%, to 3,891.93. The Dow Jones Industrial Average fell 280.83 points, or 0.9%, to 31,874.57. The Nasdaq composite rose 5.90 points, or 0.1%, to 11,434.05. Treasury yields plunged following several reports on the economy that were weaker than expected. Switzerland’s Credit Suisse sparked a broad selloff early Wednesday after its shares fell to a new low. Markets pared some of their losses as the Swiss National Bank said it could provide some assistance to Credit Suisse if needed the AP reports.

Stocks of US banks tumbled again Wednesday after enjoying a brief, one-day respite on Tuesday. The heaviest losses were focused on smaller and mid-size banks, which are seen as more at risk of having customers try to pull their money out en masse. Larger banks also fell, but not by quite as much. First Republic Bank sank 21.4%, a day after soaring 27%. JPMorgan Chase slid 4.7%. Many analysts are quick to say the current weakness for banks looks nowhere near as bad as the 2008 crisis that torpedoed the global economy. But worries are nevertheless rising that pain spreading through the banking system could spark a downturn.

"When you have worries about contagion and a financial crisis, there is increasing risk of a global recession," says Anthony Saglimbene, chief market strategist at Ameriprise, pointing to the first drop in the US crude oil price below $70 per barrel since 2021. A weaker economy would burn less fuel. "The regional banks are so important to small businesses, mid-sized businesses" by providing loans, he says. "They're a centerpiece of the economy." On Wall Street, companies in the oil and gas business led widespread drops for the S&P 500, where three out of four stocks fell.

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Weaker-than-expected economic reports released Wednesday may have allayed worries that the Fed could stoke inflation if it pauses interest rate hikes. One showed that inflation at the wholesale level slowed by much more last month than economists expected. It’s still high at a 4.6% level versus a year earlier, but that was better than the 5.4% that was forecast. Other data showed that US spending at retailers fell by more than expected last month. Such data could raise worries about a recession on the horizon, but they may also take some pressure off inflation in the near term.

(More stock market stories.)

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