Dow Jones tumbles at the open as Credit Suisse suspension adds to banking contagion fears

9:40pm: Bank stocks take another hit

Shortly after the opening bell, the Dow was down 454 points, 1.4%, to 31,702, the Nasdaq Composite lost 108 points, 0.9%, to 11,320 and the S&P 500 fell 54 points, 1.4%, to 3,865. 

The collapse of both Silicon Valley Bank and Signature Bank has brought significant turmoil to the banking sector as a market as a whole. Shares of Credit Suisse were suspended after the bank’s stock hit a record low. The bank’s biggest investor, Saudi National Bank, said it could no longer provide the Swiss Bank with further financial credit, according to a report by Reuters. 

Meanwhile, Bank of America shares have fallen more than 2% and Wells Fargo stock is down nearly 4%. 

7:30am: Retail sales also in the spotlight 

Wall Street is expected to open lower today, giving back much of Tuesday’s strong gains amid lingering fears of banking contagion following the collapse of Silicon Valley Bank (SVP), with investors also looking to US retail sales for further direction.

Futures for the Dow Jones Industrial Average (DJIA) fell 1.7% in pre-market trading, while those for the broader S&P 500 index also declined 1.7%, and contracts for the Nasdaq-100 shed 1.5%. 

Sentiment took a knock as Credit Suisse’s shares were suspended having tumbled to a record low after its largest investor, Saudi National Bank, said it could no longer provide the Swiss Bank with further financial credit, according to a report by Reuters.

“Sentiment just seems to have evaporated, with big moves in fixed income markets and banking shares again, probably on a further slide in Credit Suisse shares and rise in its CDS,” commented Neil Wilson, chief market analyst at “European equity markets led by banking shares and US futures are tumbling. If CS were to run into serious existential trouble, we are in a whole other world of pain.”

The Nasdaq Composite led Tuesday’s gains, rallying 2.1% to 11,428, supported by news that Meta Platforms plans to axe another 10,000 jobs this year as part of the tech giant’s cost-cutting measures. February CPI inflation data that was largely in line with expectations helped push the DJIA 1.1% higher to 32,155, while the S&P 500 gained 1.7% to 3,919. The small-cap Russell 2000 index added 1.9% to 1,777.

“Wall Street made solid gains on Tuesday, helped not only by the post-SVB relief rally but also thanks to some slightly softer than expected inflation data,” commented James Hughes, chief market analyst at Scope Markets.

“This is making life that little bit harder for the policy hawks at the Federal Reserve and although the market continues to price in a 25 basis point hike next week, the accompanying press conference will be under close scrutiny for clues as to what happens next,” he added.

The macro focus today moves to US February retail sales as the next key input to monitor, noted TickMill Group’s Market Analyst James Harte.

“As with CPI, retail sales spiked higher in January, adding to the sense of hawkishness at the time. However, looking at today’s data, the market is expecting headline retail sales to fall 0.3%, down from 3% prior with core retail sales expected to fall 0.1%, down from 2.3% prior,” Harte said.

“Indeed, in light of yesterday’s weaker US CPI reading, market pricing now reflects a roughly 20% chance that the Fed keeps rates on hold this month,” he added.