US stocks tumble on Silicon Valley Bank turmoil

Traders during morning trading at the New York Stock Exchange on March 10, 2023. PHOTO: AFP

NEW YORK – Wall Street stocks ended Friday’s session decisively lower as banking shares wobbled on contagion fears, after the failure of regional lender Silicon Valley Bank (SVB).

The Dow Jones Industrial Average finished down 1.1 per cent at 31,909.96.

The broad-based S&P 500 fell 1.5 per cent to 3,861.59, while the tech-rich Nasdaq Composite Index slid 1.8 per cent to 11,138.89.

The SVB debacle dominated investors’ focus all day, with the Nasdaq suspending trade on the stock before the market opened, overshadowing a solid United States jobs report.

The Federal Deposit Insurance Corporation announced it was seizing control of SVB and would reopen branches on Monday to allow customers to recover up to US$250,000 (S$338,000) in deposits.

The move makes SVB the largest retail bank to fail since 2008.

“It is the second day of concerns around the banking sector and questions whether this reflects any systemic risk,” said Mr Angelos Kourkafas, of financial services firm Edward Jones.

“Probably, the answer to that is no. But still, confidence is a bit shaken,” he said.

SVB’s problems were sparked by customer withdrawals that led the company to liquidate securities positions whose values had plummeted due to the Federal Reserve’s interest rate hikes.

“What today and this week show is that we are beginning to feel the effect of Fed tightening on the markets and the economy,” Mr Kourkafas said.

The hardest-hit banks included First Republic Bank, which slumped 14.8 per cent, and Comerica, which slipped 5 per cent. Fifth Third Bancorp was down 4.2 per cent.

Larger banks such as JPMorgan Chase and Bank of America – both of which suffered bruising losses on Thursday – either rose or fell modestly.

Among other companies, Boeing advanced 0.9 per cent as the Federal Aviation Administration cleared the way for the delivery resumption of 787 Dreamliner planes, concluding that the aviation giant had addressed earlier concerns.

Caterpillar dove 5.8 per cent following a downgrade from UBS, which said the company’s weakening outlook was “underappreciated”. AFP

Join ST's Telegram channel and get the latest breaking news delivered to you.