Stocks plunged Tuesday as concerns about the health of the financial sector after the collapse of First Republic Bank collided with broader fears of signs of a weakening economy.
Some regional banks under pressure since the failures of Silicon Valley and Signature banks in March were hit hard Tuesday, with regulators seizing First Republic and JPMorgan Chase on Monday. shattered the relative calm that prevailed after it was sold to
PacWest lost a third of its value in the first hour of trading. Western Alliance fell nearly 20%, while Comerica Bank and Zions Bank both posted his double-digit declines.
The move comes alongside data showing U.S. manufacturers received fewer new orders than expected in March, continuing the weakness in the labor market for the month. Crude oil prices have also plummeted as the prospect of a recession is likely to cut energy demand.The price of Brent crude, the international benchmark, has plunged to about $76 a barrel, close to its lowest level for the year.
The S&P 500 fell 1.5% in its worst day since early March. Energy stocks were the hardest hit, with the sector as a whole down about 5%, followed by financial stocks, down about 3%.
“The banking problem will continue,” said Andrew Brenner, head of international fixed income at National Alliance Securities. “I never believed the idea that giving the First Republic to JP Morgan would end this. There is real fear of instability and an economic slowdown.”
Elsewhere, Bank lending survey Eurozone lenders are withdrawing loans at the fastest pace since the European debt crisis in 2011, according to data released by the European Central Bank on Tuesday. Concerns that the credit crunch will weigh on the economy are also prominent among US policymakers.
Adding to the uncertain outlook, U.S. lawmakers have yet to agree to a deal that would raise the ceiling on the amount of debt the government can take on, with government officials saying they could run out of money by June. I am warning you.
