US stocks fall as banking shares tumble

NEW YORK, NEW YORK - MARCH 08: Traders work on the floor of the New York Stock Exchange, in New York City. PHOTO: AFP

NEW YORK - Banking shares tumbled on Thursday 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 Mr Art Hogan, an analyst at B. Riley Financial.

“It feels as though there’s some cracks in the regional banks,” Mr Hogan added.

The Dow Jones Industrial Average dropped 1.7 per cent to 32,254.86.

The broad-based S&P 500 slumped 1.9 per cent to 3,918.32, while the tech-rich Nasdaq Composite Index slid 2.1 per cent to 11,338.35.

SVB Financial Group, a Silicon Valley-focused financial company, disclosed 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 per cent, while the banking sector as a whole was a sea of red. JPMorgan Chase dropped more than 5 per cent.

Investors are also feeling cautious ahead of Friday’s government jobs report, which will be scrutinised for its implications for monetary policy.

Stocks have fallen this week following congressional testimony from Fed Chair Jerome Powell warning that the central bank could accelerate interest rate hikes depending on economic data. AFP

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