Day Traders Diary

3/15/23

The major averages closed mixed and off the lows as more financial concerns arose, this time from foreign firm, Credit Suisse. The Dow Jones Industrial Average ended down 280.83 points, or 0.87% at 31,874. The S&P 500 dropped 27 points or 0.7% to 3,891 while the Nasdaq Composite was up 5 points or 0.05% to 11,434.

The major averages, however, were well off their session lows. The Dow at one point was down 725 points, and the S&P 500 briefly gave up all of its 2023 gains.

The indexes regained some ground in afternoon trading following announcement from a Swiss regulator that the country's central bank would give Credit Suisse liquidity if necessary. Investors were concerned earlier in the day after the Saudi National Bank, Credit Suisse's largest investor, said Wednesday it could not provide any more funding, according to a Reuters report.

The news came after the Swiss lender said earlier this week it had found "certain material weaknesses in our internal control over financial reporting" for the years 2021 and 2022. U.S.-listed shares of Credit Suisse were last down nearly 14%, off session lows.

In recent days, a crisis in the financial sector has centered around regional banks as Silicon Valley Bank and Signature Bank collapsed, both casualties of poor management in the face of eight interest rate hikes by the Federal Reserve in the last 12 months. Attention turned to the big banks on Wednesday.

"We're seeing the bank turmoil that started in Silicon Valley, it's really spreading across the globe," said Edward Moya, senior market analyst at Oanda. "The markets are realizing that you're seeing the banks are in trouble because a lot of their profitability models have been based on, for the most part, zero-interest rates."

As Credit Suisse dragged down the European Bank sector, U.S. big bank shares declined in sympathy. Citigroup slid 5%, while Wells Fargo and Goldman Sachs each lost 3%. Bank of America slipped just under 1%. The Financial Select Sector SPDR Fund (XLF) lost 2.6%, giving up its 2% pop on Tuesday.

Regional banks, which rebounded Tuesday to lift sentiment for the broader market, fell back into the red again. The SPDR S&P Regional Banking ETF (KRE) was down 1.6%, pushed down by losses of more than 20% and 10% in First Republic Bank and PacWest Bancorp, respectively.

"There's just such so much information to digest," said Dan Eye, chief investment officer at Fort Pitt Capital Group. "Investors (are) scrambling to position around it."