US stocks fell as investors continued to worry about the health of the banking industry.
At 9:50 ET (13:50 GMT), the Dow Jones was down 249 points or 0.8%, while the S&P 500 was down 0.4% and the NASDAQ Composite was down 0.1%.
SVB Financial filed for bankruptcy protection early Friday after a withdrawal of deposits at Silicon Valley Bank forced regulators to shut down. The move allows the parent company time to consider strategic alternatives to the brokerage-dealer and venture capital firm, which were not part of the profile.
It also comes a day after a group of major banks put together $30 billion in uninsured funds at First Republic Bank (NYSE:FRC), which has been caught up in a massive sell-off in banking stocks. since the collapse of Silicon Valley Bank last week.
First Republic suspended its dividend following the move. Their shares fell 20% on Friday.
The shake-up in the banking sector could give the Federal Reserve more reason to be cautious about interest rates ahead of next week's policy meeting.
In the wake of the SVB's woes, expectations were high that the Fed would raise rates by half a percent, as Chairman Jerome Powell told Congress that the fight against inflation was not over.
But with small and regional banks under pressure, lending could shrink and slow the economy. That allows the Fed to raise rates less aggressively. Most futures traders are now expecting a quarter percent gain.
Shares of FedEx Corporation (NYSE:FDX) rose 9% after the logistics giant raised its outlook for the full year as cost-cutting measures kick in.
Oil continues to fall. WTI crude oil futures fell 2% to $66.94 a barrel while Brent crude fell 2% to $73.12 a barrel. Gold futures rose 1.6% to $1954.
Credit Suisse collapses after being denied merger
Shares of Credit Suisse (SIX:CSGN) fell more than 8.5% in Zurich after Bloomberg reported that the bank rejected a suggestion by Swiss regulators that its much larger rival UBS would take over it. UBS is also reportedly opposed to the deal, according to newswire.
Switzerland is under pressure to find a solution to a crisis that is damaging its reputation as a financial center, which has bet heavily on imposing the country's tightest capital and liquidity requirements. all major jurisdictions after the previous financial crisis.
A merger with UBS would violate a longstanding tenet that merging those two banks would create an unacceptable concentration risk in the Swiss banking sector.
Meanwhile, shares of UBS (NYSE:UBS) were also affected by the news, falling more than 3.0% in pre-opening New York trading.
5. Oil prices struggle amid economic worries
Crude oil prices struggled to make any gains over the weekend, where financial stability concerns forced market participants to take a more cautious view on the possibility of growth. demand this year. That's despite the agency's official forecasts largely in light of recent banking volatility.