The stock market opened with steep losses Wednesday as concerns about the health of Credit Suisse triggered fears of a broader banking crisis.
The Dow Jones Industrial Average opened with a loss 1.5 percent Wednesday, a decline of almost 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 watched shares of Credit Suisse plunge more than 30 percent in overseas trading, according to CNBC. Investors began to lose confidence in the bank after the chairman of the Saudi National Bank, Credit Suisse’s largest investor, told Reuters that the Saudi central bank would not boost its investment in the troubled Swiss firm.
Credit Suisse, Europe’s second largest bank, has faltered under years of scandals and financial woes. Credit Suisse also operates in the U.S. and is subject to the strictest Federal Reserve supervision and stress tests. Silicon Valley Bank, which collapsed 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 Wednesday at a conference in Saudi Arabia that the bank was in good financial shape, according to the Wall Street Journal.
The Credit Suisse selloff is the latest aftershock of the Silicon Valley Collapse to hit financial markets. After falling through most of Monday, bank stocks rebounded Tuesday as the emergency actions taken by federal officials over the weekend appeared to reassure investors.
Even so, the new concerns over Credit Suisse quickly spread through markets Wednesday, leading to losses for Goldman Sachs, JPMorgan Chase, American Express, and a slew 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, were down more than 15 percent after the opening bell. First Republic is one of six regional banks who may be downgraded by Moody’s Analytics over concerns about their balance sheets.
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