US stocks end lower as regional banks dive again

NEW YORK: Wall Street stocks dropped on Thursday (May 4) following another brutal sell-off in regional banking shares, in the wake of four bank failures since early March.

The Dow Jones Industrial Average fell 286.5 points, or 0.86%, to 33,127.74, the S&P 500 lost 29.53 points, or 0.72%, to 4,061.22. The Nasdaq Composite dropped 58.93 points, or 0.49%, to 11,966.40.

All three of Wall Street’s major indices marked their fourth straight day of losses. For Nasdaq it was its longest stretch of losses since December.

Steep declines by more banks are adding to recession worries as markets continue to digest fresh interest rate hikes from central banks, analysts said.

“Financial stability concerns are not going away anytime soon,” said Oanda’s Edward Moya.

That will continue to fuel calls that the economy is headed towards a more hard-hitting recession than some are expecting, he added.

Thursday’s losses came after the European Central Bank followed the Federal Reserve in hiking interest rates by a quarter point.

Financial shares suffered across-the-board losses, but the deepest declines were in midsized regional banks whose reassurances about their financial positions fell flat.

Shares of PacWest Bancorp slumped 50.6%, First Horizon plunged 33.6% and Western Alliance Bancorporation dropped 38.5%.

Canada's Toronto-Dominion Bank Group called off its US$13.4 billion acquisition of First Horizon Corp, triggering the slump in the US bank's shares.

Comerica and Zion Bancorporation both lost about 12%. The KBW Regional Banking index ended down 3.5%, bouncing off its session low which was down about 7%.

“Regional banks and tightening credit conditions are weighing on the market as investors try to recalibrate on where we are in terms of credit cycles and bank lending standards, and when a potential recession may hit,“ said Zhe Shen, managing director of diversifying strategies at TIFF Investment Management.

Also hard-hit was entertainment conglomerate Paramount Global, which sank 28.4% following disappointing results as it cut its dividend. – AFP, Reuters

Source: The Sun Daily

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