NEW YORK: Banking shares tumbled on Thursday (March 9) following signs of major trouble at two regional banks, adding to the pressure on stocks ahead of key US jobs data.
The market movements are a “flight to safety” amid worries about the financial sector, said Art Hogan, an analyst at B. Riley Financial.
“It feels as though there’s some cracks in the regional banks,” he added.
The Dow Jones Industrial Average fell 543.54 points, or 1.66%, to 32,254.86, the S&P 500 lost 73.69 points, or 1.85%, to 3,918.32 and the Nasdaq Composite dropped 237.65 points, or 2.05%, to 11,338.36.
The biggest drag on the S&P 500 came from the financial sector followed by information technology.
SVB Financial Group, a Silicon Valley-focused financial company, disclosed on Wednesday that it lost US$1.8 billion following securities sales to raise funds, as it contends with declining customer deposits.
The news came on top of an announcement the same day that crypto banking titan Silvergate plans to shut down in the face of cryptocurrency market turmoil.
Shares of SVB plunged more than 60%, while the banking sector as a whole was a sea of red. JPMorgan Chase dropped more than 5%.
Investors are also feeling cautious ahead of Friday's government jobs report, which will be scrutinised for its implications for monetary policy.
“There’s a lot of anticipation around tomorrow’s jobs report. We’re going to get a slew of data in the next week and a half,” said Mona Mahajan, Senior Investment Strategist, Edward Jones, New York, also citing inflation and retail sales reports all due out before the next Fed meeting which ends March 22. – AFP, Reuters
