Wall Street tumbles as Credit Suisse sparks fresh bank selloff
U.S. stocks fell sharply on Wednesday as turbulence at Credit Suisse revived fears of a banking crisis, eclipsing bets of a smaller interest U.S. rate hike in March following weak economic data.
Credit Suisse’s troubles piled more pressure on the banking sector, undoing relief from emergency measures taken by U.S. authorities to prevent contagion after the collapse of SVB Financial and peer Signature Bank.
Some investors believe aggressive U.S. interest rate hikes by the Federal Reserve caused cracks in the financial system.
“They’ve tightened at the steepest, most dramatic rate that we’ve seen since 1980 and so I think this could be the opportunity for them to pause,” said Cresset Capital CIO, Jack Ablin.
U.S.-listed shares of Credit Suisse hit a record low, after its largest investor said it could not provide more financing to the bank, starting a rout in European lenders and pressuring U.S. banks as well. “Anything negative from any highly visible institution, in this case Credit Suisse, is going to have ripple effects across the financial sector,” said Michael James, managing director of equity trading at Wedbush Securities.
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