Wall Street falls as SVB collapse fuels fears of bank contagion

By Amruta Khandekar and Shristi Achar A

March 13 (Reuters) – U.S. stock indices fell on Monday as the failure of Silicon Valley Bank stoked fears of contagion with trading halted at several banks, while expectations rose for a pause in rate hikes. interest rates from the Federal Reserve in March.

* The sudden collapse of SVB Financial on Friday, following a failed capital increase, raised concerns about the risks to other banks of the Fed’s steepest rate hike cycle since the early 1980s.

* Over the weekend, regulators intervened to restore investor confidence in the banking system, saying that SVB depositors will have access to their funds on Monday.

* “When you take such a big and fast step, the first thing you think is that the crisis has been avoided. But the second thought is: how big was that crisis, how big were the risks that had to be taken this measure?” said Rick Meckler, a partner at Cherry Lane Investments.

* “The only positive for markets that I’ve heard coming from this is the belief that it will slow rate hikes as the Fed would seek to prevent further damage to the financial sector,” he added.

* Trading in Signature Bank, closed by regulators on Sunday, was halted.

* First Republic Bank tumbled 65.1% as news of new financing failed to reassure investors, while Western Alliance Bancorp, PacWest Bancorp and Charles Schwab lost 75.9%, 41% and 19%, respectively. Trading in the securities was halted several times due to volatility.

* Shares of big US banks such as JPMorgan Chase & Co, Morgan Stanley and Bank of America were down between 2.8% and 6.3%. The KBW regional banking index fell 11.2%, while the S&P 500 banks index fell 7.7%.

* The Dow Jones Industrial Average was down 120.81 points, or 0.38%, at 31,788.83; The S&P 500 Index fell 43.09 points, or 1.12%, to 3,818.50; the Nasdaq Composite was down 121.04 points, or 1.09%, at 11,017.85.

* The benchmark S&P 500 erased all its gains so far this year as the SVB’s slump weighed on investor sentiment, already weakened by fears the Fed could raise rates at its meeting next week.

(Reporting by Shubham Batra and Amruta Khandekar in Bengaluru; additional reporting by Shreyashi Sanyal; editing in Spanish by Manuel Farías)

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