Dow drops as banking crisis deepens
US stocks opened trading on Wednesday with a steep decline as Wall Street continues to struggle with the unfolding banking turmoil.
The Dow Jones Industrial Average slid over 720 points, down over 2% in afternoon trading, before recovering some losses and closing the session 280 points lower. The S&P 500 dropped 0.7%, while the tech-heavy Nasdaq eked out a small gain of 0.05%.
Pressure on the troubled financial sector has risen after banking giant Credit Suisse’s largest shareholder decided not to increase funding. Shares in the Swiss lender, which has large US and global operations, plummeted almost 25% on the news, finishing 14% lower.
US bank shares also fell, with Citigroup down over 5% and Wells Fargo closing over 3% lower. JPMorgan Chase shares dropped nearly 5%, while Goldman Sachs and Bank of America stumbled around 3% and 1%, respectively.
Credit Suisse’s largest investor, Saudi National Bank, reportedly announced on Wednesday that it could not provide any more funding after the bank had found “material weaknesses” in its financial reporting.
The Swiss lender is currently trying to recover from a series of scandals that have shaken the confidence of investors and clients, and from billions in losses. Customer outflows in the fourth quarter totaled over 110 billion Swiss francs ($120 billion).
The bank’s share price has been sinking to record lows this week amid broader market turmoil triggered by the collapse of several US tech lenders.
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