The stock market opened with heavy losses on Wednesday as concerns about the health of Credit Suisse sparked fears of a wider banking crisis.
The Dow Jones Industrial Average opened with a loss of 1.5 percent on Wednesday, down nearly 500 points after the opening bell. The S&P 500 index opened with a loss of 1.4 percent and the Nasdaq composite opened with a loss of 1.1 percent.
Stock futures began selling off before the stock market opened Wednesday as U.S. traders saw shares of Credit Suisse plunge more than 30 percent in foreign trade, according to CNBC. Investors began to lose confidence in the bank after the chairman of Saudi National Bank, Credit Suisse’s biggest investor, told Reuters the Saudi central bank would not increase its investment in the troubled Swiss firm.
Credit Suisse, Europe’s second largest bank, has been reeling under years of scandals and financial problems. Credit Suisse also operates in the United States and is subject to the strictest Federal Reserve supervision and stress tests. Silicon Valley Bank, which collapsed on Friday and set off a global banking scare, was exempted from those rules under a 2018 bipartisan law signed by former President Trump.
Credit Suisse chairman Axel Lehmann said on Wednesday at a conference in Saudi Arabia that the bank was in good financial shape, according to the Wall Street Journal.
The Credit Suisse sale is the latest aftershock of the Silicon Valley collapse that hit financial markets. After falling through most of Monday, bank stocks rose on Tuesday as emergency action taken by federal officials over the weekend appeared to reassure investors.
Still, fresh concerns about Credit Suisse spread quickly through markets on Wednesday, leading to losses for Goldman Sachs, JPMorgan Chase, American Express and a host of other banks as the market opened.
Shares of First Republic Bank, another California-based bank with tens of billions of dollars in uninsured deposits, fell more than 15 percent after the open. First Republic is one of six regional banks that could be downgraded by Moody’s Analytics because of concerns about their balance sheets.
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