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Feb retail sales, producer inflation fall
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Credit Suisse U.S. shares hit record low
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Regional bank stocks fall sharply
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Indexes down: Dow 1.30%, S&P 1.23%, Nasdaq 0.91%
(Updates to market open)
By Amruta Khandekar and Shubham Batra
March 15 (Reuters) - U.S. stocks dropped on Wednesday as
turbulence at Credit Suisse renewed fears of a banking crisis,
while data hinting at economic weakness kept alive hopes of a
less aggressive monetary policy move by the Federal Reserve in
March.
U.S.-listed shares of Credit Suisse slid 24.3% to hit
a record low, after the Swiss bank's largest investor said it
could not provide more financial assistance to the lender.
Fuelling hopes of a less hawkish Fed policy, data showed
retail sales fell 0.4% last month from a growth of 3.2% in
January, while economists polled by Reuters had expected a
contraction of 0.3%.
A separate report showed U.S. producer prices unexpectedly
fell in February and the rise in prices in January was not as
large as initially thought, offering some hopeful signs in the
fight against inflation.
The data comes at a time when the collapse of SVB Financial and peer Signature Bank had already fanned
fears about the health of other banks, fuelling hopes that the
Fed would steer clear of sharp rate hikes at its next meeting to
ensure financial stability.
Yield on the 10-year Treasury notes fell to 3.47%, while that on the two-year note, which best reflects interest rate expectations, fell to 3.87% but was off session lows hit after the data.
Traders now see equal chances of a 25-basis-point rate hike
and a pause at the Fed's March meeting. While assurances and emergency measures by U.S. authorities
had helped regional banks stage a rebound in the previous
session, the lenders nearly erased those gains in early trade.
First Republic Bank fell 13.1% while peers Western
Alliance Bancorp and PacWest Bancorp slid 7.1%
and 18.4%, respectively, before trading in their shares was
halted for volatility.
Big U.S. banks including JPMorgan Chase & Co ,
Citigroup and Bank of America Corp fell between 5%
and 1%.
The KBW regional banking index slid 3.8% while the
S&P 500 banking index dropped 4.2%%.
"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.
"Given all the turmoil with Silicon Valley Bank and Signature
Bank, expectations have dramatically risen come that the Fed
will keep rates unchanged, or maybe raise them (by) 25 basis
points."
Wall Street rallied in the previous session after a highly
anticipated inflation report showed a slowdown in February
consumer prices growth, spurring hopes of a smaller rate hike at
the conclusion of the Federal Reserve's meeting on March 22.
At 9:47 a.m. ET, the Dow Jones Industrial Average was
down 417.25 points, or 1.30%, at 31,738.15, the S&P 500 was down 48.11 points, or 1.23%, at 3,871.18, and the Nasdaq
Composite was down 104.12 points, or 0.91%, at
11,324.03.
Shares of Charles Schwab Corp fell 1.9%, a day
after its chief executive said the firm has enough liquidity.
Declining issues outnumbered advancers for a 6.10-to-1 ratio
on the NYSE and for a 3.71-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week highs and 31 new lows,
while the Nasdaq recorded 5 new highs and 203 new lows.
(Reporting by Amruta Khandekar and Shubham Batra in Bengaluru; additional reporting by Shristi Achar; Editing by Dhanya Ann Thoppil and Vinay Dwivedi)
