by David Carnevali
NEW YORK (Reuters) – The New York Stock Exchange ended in disarray on Wednesday as turmoil at Credit Suisse reignited fears of a banking sector crisis, drowning the prospect of the Federal Reserve (Fed) proceeding to a less sharp rise in rates than expected after gloomy indicators.
The Dow Jones index fell 0.87%, or 280.83 points, to 31,874.57 points.
The broader S&P-500 lost 27.36 points, or 0.70%, to 3,891.93 points.
The Nasdaq Composite advanced for its part by 5.90 points (0.05%) to 11,434.05 points.
In sharp decline during the session, the main Wall Street indices rebounded before the close as the Swiss central bank said it was ready to come to the aid “if necessary” to Credit Suisse. If the Dow Jones and the S&P-500 have erased part of their losses, only the Nasdaq is however back in the green, on the margin.
Credit Suisse’s worries have added pressure on the banking sector, overshadowing the emergency measures taken earlier this week by the US authorities to contain the possible repercussions of the fall of Silicon Valley Bank and Signature Bank.
In the eyes of some investors, the Fed’s aggressive monetary policy in the face of inflation has caused flaws in the financial system.
Credit Suisse’s stock on Wall Street plunged to an all-time low after the bank’s largest shareholder said it could not provide additional financial aid, also causing tremors for European and US banks.
“Any negative element coming from a very visible institution, in this case Credit Suisse, will have repercussions on the financial sector”, commented Michael James, manager of Wedbush Securities.
Data released during the day showed that retail sales in the United States contracted in February, as expected by analysts.
A separate study said producer prices fell unexpectedly last month, offering cause for hope in the fight against inflation, following data showing a deceleration in consumer prices.
These indicators have fueled speculation that the US central bank will hike rates by 25 basis points, not 50 basis points, following its monetary policy meeting next week.
Most of the major sectors of the S&P-500 ended the day’s session in the red, including energy which posted the biggest drop (5.42%).
On the stock side, First Republic Bank plunged 21.37% and PacWest Bancorp 12.87%, with several trading suspensions due to volatility.
Major US banks including JPMorgan Chase & Co, Citigroup and Bank of America fell and weighed on the S&P-500 banking index, down 3.62%.
(French version Jean Terzian)
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