Regional bank stocks plunged in premarket trading Wednesday as trouble at Swiss giant Credit Suisse fueled a major selloff in US markets.
The latest turmoil emerged after credit rating agency Moody’s cut its outlook for the banking system due to “rapid deterioration in the operating environment” following the failure of Silicon Valley Bank and other firms.
Moody’s placed six regional banks on “downgrade” watch: First Republic, Zions Bancorp, Comerica, Intrust Financial, UMB Financial and Western Alliance.
Shares of San Francisco-based First Republic hovered in negative territory and were down more than 5% in premarket trading as of 9 a.m. ET. Zions Bancorp, Comerica plunged more than 9%.
Western alliance was down nearly 7%, while UMB Financial was down nearly 5%. KeyCorp was down more than 3%.
SVB’s collapse sparked fears of a run on regional banks.AFP via Getty Images
Charles Schwab’s stock was flat after CEO Walt Bettinger revealed a day earlier that he bought 50,000 shares in the firm.
The plunge marked the latest sign of volatility this week for regional bank stocks — which plunged across the board on Monday only to bounce a day later. First Republic shares plunged nearly 70% to start the week before rallying on Tuesday.
Separately, Zurich-based banking giant Credit Suisse plunged as much as 25% after its biggest shareholder, Saudi National Bank, said it wouldn’t pour more money into the troubled institution.
Credit Suisse’s stock cratered to an all-time low shortly after admitted to finding “material weaknesses” in its financial reporting over the last two years. The Swiss bank has significant holdings in the US, raising concerns of further contagion.
As The Post reported, SVB’s collapse sparked concern about a potential run on regional banks.
Larger US banks were also caught up in the market chaos.
Credit Suisse shares hit an all-time low this week.Getty Images
Wells Fargo declined more than 5%, while Citigroup shares were down nearly 5%. Bank of America sank more than 4%. Goldman Sachs fell nearly 4%.
The stock plunge extended to the broader market.
Dow Jones Industrial Average futures were down about 600 points on economic worries. The tech-heavy Nasdaq futures were down more than 200 points and broad-based S&P 500 futures were down more than 80 points.
The entire banking sector has been under pressure since federal regulators were forced to shut down SVB and another failed institution, Signature Bank of New York.
The two firms ranked as the second- and third-largest bank failures in US history.
The feds have reportedly investigating the inner workings at SVB prior to its failure — including last-minute stock sales by its top executives.
On Tuesday, Reuters reported that the Federal Reserve is mulling stricter rules and oversight for midsized banks in the wake of SVB’s collapse.
Source link: https://nypost.com/2023/03/15/regional-bank-stocks-plunge-as-credit-suisse-moodys-downgrade-rattle-us-market/