To reach 3,916 the S&P 500 lost 43 points, or 1.1%. To reach 31,861, the Dow dropped 384 points, or 1.1%. The Nasdaq rose 11,630 points, or 0.7%. Concern over the second- and third-largest US bank failures in history has sent markets around the world into a tailspin this week.
After two banks on both sides of the Atlantic drew down tens of billions of dollars in capital to strengthen their finances just one day prior, the markets surged in relief. Nevertheless, some of the optimism faded on Friday, and the pair started to decline again. Shares of Credit Suisse fell 8% in Switzerland. First Republic Bank's stock fell more than 30% on Wall Street and was headed for a weekly decline of over 70%.
Although the two banks face separate problems, there is a general concern that the financial system may be collapsing under the strain of the fastest series of interest rate increases in decades. Ross Mayfield, a Baird investment strategy analyst, predicted that "something will crack" if the Fed raises interest rates this quickly and by this much.
Even in slower, smaller rate-hike cycles, this has a very clear history of taking place. Analysts have nonetheless been eager to point out that the present bank upheaval does not appear to be nearly as terrible as the financial crisis of 2007–2008.
