The stock market opened sharply lower on Wednesday as concerns about the health of Credit Suisse sparked fears of a wider banking crisis.
The Dow Jones Industrial Average opened Wednesday with a 1.5% loss. The S&P 500 index opened him down 1.4% and the Nasdaq Composite opened his down 1.1%.
Stock futures began selling before the stock market opened on Wednesday as US traders saw Credit Suisse shares plummet. 30% or more According to CNBC, in foreign trade.The chairman of the Saudi National Bank, the biggest investor in Credit Suisse, told Reuters, the Saudi Central Bank would not support investment At a troubled Swiss company.
Credit Suisse, Europe’s second largest bank, is in recession. year of scandal and financial difficulties. Credit Suisse also operates in the United States and is subject to rigorous oversight and stress testing by the Federal Reserve. Silicon Valley Bank, which collapsed on Friday and sparked a global bank phobia, was exempt from those rules under the bipartisan law of 2018 signed by former President Trump.
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Credit Suisse chairman Axel Lehmann said at a conference in Saudi Arabia on Wednesday that the bank’s financials are in good shape. According to The Wall Street Journal.
The Credit Suisse plunge is the latest aftermath of the Silicon Valley collapse that has hit financial markets. Bank stocks rallied on Tuesday after falling through most of Monday. That’s as emergency measures taken by federal officials over the weekend appeared to put investors at ease.
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Still, renewed concerns about Credit Suisse quickly spread through the market on Wednesday, sending losses to Goldman Sachs, JPMorgan Chase, American Express and many banks as the market opened.
Shares of First Republic Bank, another California-based bank with tens of billions of dollars in uninsured deposits, fell more than 15% after the opening bell. First Republic is one of six regional banks that could be downgraded by Moody’s Analytics due to balance sheet concerns.
After the Fed, Federal Deposit Insurance Corp and Treasury Department took emergency steps this weekend to quell a potential banking panic, President Biden He called on Congress to strengthen banking regulations.
The FDIC acquired Silicon Valley Bank and Signature Bank last weekend, pledging to give customers of both failed banks full access to all their deposits. Most of Silicon Valley and Signature’s deposits were not covered by the FDIC’s $250,000 per account insurance threshold, but the institution said financial stability concerns meant that each bank’s said to back up the deposit of
The Fed also opened an emergency lending facility that allows banks to exchange government bonds and other securities for low-interest loans. The program aims to ensure that banks have enough cash on hand to cover their deposits without having to sell depreciated bonds and other securities on the open market for a loss.
These emergency measures appeared to put investors at ease on Tuesday, but Wall Street experts warn that a radical fix may be needed.
“Actions by the Fed, Treasury and FDIC are likely to help stabilize financial markets and slow deposit outflows, but are not expected by some market participants,” Goldman’s Alec Phillips said. We did not reach all possible deposit guarantees.” Sax for Tuesday’s research notes.
“Covering uninsured depositors on a case-by-case basis may give depositors an implied guarantee, but only Congress can provide an explicit guarantee for all deposits. is.”
—10:25 am update
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