Dow Jones and several other stock futures fell on Wednesday morning as pressure on financial institutions continues to increase following the collapse of Silicon Valley Bank and a dip in Credit Suisse shares.
Futures tied to the Dow Jones Industrial Average fell 628 points, or 1.9%, while the S&P 500 and the Nasdaq-100 futures fell 1.9% and 1.6%, respectively — the latest sign of a growing financial crisis after Silicon Valley Bank collapsed last week following nearly a billion-dollar negative cash balance.
CREDIT SUISSE SHARES SLIDE 20% FOR SECOND ALL-TIME LOW IN SECOND CONSECUTIVE DAY
Credit Suisse saw an all-time low in shares for the second day in a row on Wednesday. Its largest investor, Saudi National Bank, will not be providing any further assistance after U.S. shares dipped more than 27% in the premarket.
Like Credit Suisse, other Italian banks were subjected to trading stoppage after sharp declines on Wednesday, such as UniCredit, Monte Dei Paschi, and FinecoBank.
As the Swiss bank continues to block banks in the European arena, U.S. banks are declining, as well. Citigroup and Wells Fargo each shed 3%, while Goldman Sachs and Bank of America fell 2% each.
Regional bank stocks from First Republic, KeyCorp, and Fifth Third Bancorp reported slight recoveries on Tuesday, signaling that a possible contagion could be avoided. However, regional banks fell back into the red again as of Wednesday.
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Peter Boockvar of Bleakley Financial Group told CNBC that pressure on the financial sector was growing broadly due to bank failures that have changed the industry’s mindset.
“What this is telling us is there’s the potential for just a large credit extension contraction that banks are going to embark on [to] focus more on firming up balance sheets and rather than focus on lending,” Boockvar said.
