Wall Street bank stocks plunge after Credit Suisse chaos rattles US market
The nation’s largest banks got walloped Wednesday — showing they weren’t immune to the crisis that has hammered regional lenders — after Credit Suisse reignited fears of a contagion in global banking.
Shares of JPMorgan Chase and Citigroup slid more than 4%, while Wells Fargo and Goldman Sachs fell more than 3% and Bank of America sank 0.9%.
US banks got slammed as Zurich-based Credit Suisse plunged 24% after its biggest shareholder, Saudi National Bank, said it wouldn’t pour more money into the troubled institution.
Early Thursday, Credit Suisse said it intended to borrow up to $54 billion from the Swiss National Bank in what it called “decisive action” to boost its liquidity.
“This additional liquidity would support Credit Suisse’s core businesses and clients as Credit Suisse takes the necessary steps to create a simpler and a more focused bank built around client needs.” the flagship Swiss bank said in a statement.
On Wednesday, Suisse Group chairman Axel Lehmann had insisted that government assistance “isn’t a topic” for the embattled lender.
But Credit Suisse’s stock cratered to an all-time low shortly after admitted to finding “material weaknesses” in its financial reporting over the last two years. The Swiss bank has significant holdings in the US, raising concerns of further contagion.
The turmoil comes on the heels of credit rating agency Moody’s cutting its outlook for the banking system due to “rapid deterioration in the operating environment” following the failure of Silicon Valley Bank and Signature Bank.
Moody’s placed six regional banks on “downgrade” watch: First Republic, Zions Bancorp, Comerica, Intrust Financial, UMB Financial and Western Alliance.
Shares of San Francisco-based First Republic hovered in negative territory and were down 21% Wednesday. KeyCorp shares were down 3.5%.
Other regional banks seesawed, paring earlier losses and turning positive by midday. Western Alliance surged 8.3%%. Comerica rose 3.1%. But Zions Bancorp dropped 1.9%.
Charles Schwab’s stock was up 5.1% after CEO Walt Bettinger revealed a day earlier that he bought 50,000 shares in the firm.
Volatility has spiked this week for regional bank stocks — which plunged across the board on Monday only to bounce a day later. First Republic shares plunged nearly 70% to start the week before rallying on Tuesday.
Wednesday’s stock plunge extended to the broader market.
The Dow tumbled as much as 600 points on economic worries before finishing down 280 points, or 0.9%. The tech-heavy Nasdaq and S&P 500 fell less than 1%.
The entire banking sector has been under pressure since federal regulators were forced to shut down SVB and another failed institution, Signature Bank of New York.
The two firms ranked as the second- and third-largest bank failures in US history.
Billionaire investor Ray Dalio of Bridgewater Associates warned SVB’s collapse could be a “canary in the coal mine” scenario that will hurt the venture capital world and “well beyond it.”
Dalio suggested that cascading trouble in the banking sector could result in more federal intervention.
“Looking ahead, it’s likely that it won’t be long before the problems pick up, which will eventually lead the Fed and bank regulators to act in a protective way,” Dalio wrote in a blog post Tuesday.
Follow The Post’s coverage of Silicon Valley Bank’s collapse
- Ex-Silicon Valley Bank CEO Greg Becker jets to Hawaii after collapse
- Goldman Sachs lost $200M in recent US banking chaos: report
- Kevin O’Leary grilled on why he kept money at SVB if management were ‘idiots’
“So I think we are approaching the turning point from the strong tightening phase into the contraction phase of the short-term credit/debt cycle,” he added.
The feds have reportedly been investigating the inner workings at SVB prior to its failure — including last-minute stock sales by its top executives.
On Tuesday, Reuters reported that the Federal Reserve is mulling stricter rules and oversight for midsize banks in the wake of SVB’s collapse.
