U.S. banks continued to take a beating Wednesday afternoon, although energy stocks elbowed aside financials at the bottom of the market as oil prices dived to 15-month lows. After a brief rebound on Tuesday, the latest round of bank stock selling started overseas. Credit Suisse cratered to record lows after being denied financial aid from its backers. That dragged European banks and markets lower.
Meanwhile, the losses among European financials rekindled selling among U.S. bank stocks. Particularly hard hit were larger banks with broad international exposure. U.S. banks and financials saw a slight rebound Tuesday. The financial sector digested regulatory efforts to contain the contagion from the bank crisis sparked by SVB Financial and Signature Bank faltering.
On the S&P 500, Regional bank First Republic retreated 21.4% and Wells Fargo took a 3.2% dive.
Beverly Hills, Calif.-based Pacific West Bank, which had rebounded 33% on Tuesday, tumbled 12.9% Wednesday.
Among Dow Jones industrial names, American Express, Goldman Sachs and JPMorgan Chase all slumped. The trio posted declines ranging from 2.5% to 4.7%.
Western Alliance Bucks Bank Crisis, Executes Sharp Turn
Phoenix-based Western Alliance reversed higher, rallying 8.3%. On Tuesday, hedge fund Citadel announced it had taken a 5.3% stake in the bank. On Wednesday, UBS launched coverage of the stock with a buy rating and a price target of 85 — 160% above where shares traded Wednesday afternoon.
Switzerland's Credit Suisse swooned 21% in U.S. trade, after the chairman of Saudi National Bank, Credit Suisse's top shareholder, ruled out further financial intervention for the Zurich-based bank. He made the comments in an interview with Bloomberg early Wednesday. The news followed Tuesday's release of Credit Suisse's delayed annual report. That report noted "material weaknesses" to its financial controls and reporting for 2021 and 2022. Credit Suisse stock fell 30% to a record low of 1.75 Wednesday morning.
Late Monday, Moody's Investor Service cut its outlook on the U.S. banking system to negative from stable, CNBC reported. And the rating agency plans to review six regional banks for potential downgrades. Moody's cited "the extremely volatile funding conditions for some U.S. banks exposed to the risk of uninsured deposit outflow."
Additionally, First Republic Bank, Intrust Financial, UMB Financial, Zions Bancorp, Western Alliance Bank and Comerica all received downgrade warnings.
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