Both economic indicators showed a slowdown in the US economy in February, while US stocks tumbled on Wednesday as fresh turmoil at Credit Suisse ( CS ) renewed investor concerns about the banking sector.
The S&P 500 (^GSPC) fell 0.7% and the Dow Jones Industrial Average (^DJI) fell 0.9%. High-tech Nasdaq Composite (^IXIC) contracts pared previous losses and closed above the fixed level.
Bond yields fell. The benchmark 10-year US Treasury yield fell to 3.49% on Wednesday from 3.6% on Tuesday. At the top of the yield curve, the two-year yield fell to 3.89%. Oil hit a new annual low and WTI fell below $70 a barrel.
All three major indexes rose on Tuesday as core inflation data was in line with expectations. The S&P 500 rose 1.7% and the Nasdaq rose 2.3%, its best day for the index in five weeks. Shares of regional banks rose, recouping some of the recent losses.
But fresh problems at Credit Suisse rocked the markets even more on Wednesday morning. In the afternoon, the Swiss regulator said the country's central bank would provide additional liquidity if needed. Shares in the European bank fell more than 25% at one point, hitting an all-time low, after its biggest backer said it could not provide a bailout. Credit Suisse said in a report on Tuesday that it had identified "significant weaknesses" in its financial reporting controls.
In terms of US economic data, the Commerce Department said retail sales fell 0.4% last month, in line with the consensus of economists polled by Bloomberg. Meanwhile, the February producer price index, which measures how much suppliers are asking companies, unexpectedly fell by 0.1%.
Wednesday's data came after the release of the consumer price index (CPI), which rose 6.0% in February last year, the smallest increase since September 2021, according to the Commerce Department. energy, rose by 5.5%, which is also in line with forecasts.
The sudden collapse of Silicon Valley Bank and Signature Bank and the ongoing turmoil at Credit Suisse come at a time when the economy is experiencing more stable inflation. That sparked a debate among traders betting on whether the Fed will raise interest rates after next week's meeting.
Ryan Sweet, chief US economist at Oxford Economics, said his group expects a quarter-point gain after the Fed's March meeting as pressure falls mainly on regional banks.
"If inflation remains well above the 2% target, it would be premature to break the tightening cycle or cut the rate," Sweet wrote. "Politicians can use tools other than interest rates to ease the pressure on the banking system."
A similar sentiment was echoed by William Blair macro analyst Richard de Chazle, who said a quarter point advance would probably be "more reasonable" given current events.
The banking sector received a negative rating on Tuesday when Moody's downgraded its outlook for the entire US sector from negative to stable, citing a "rapidly deteriorating operating environment."
Confidence in banks continued to weaken for members of the KBW Banking Index (^BKX) as the index fell on Wednesday. However, large-cap index participants including Bank of America ( BAC ) , JPMorgan Chase ( JPM ) , Wells Fargo ( WFC ) and Citigroup ( C ) fell on Wednesday.
Banking concerns resurfaced Wednesday as shares of regional banks — First Republic Bank ( FRC ), PacWest Bancorp ( PACW ), Regions Financial ( RF ) and Zions Bancorporation ( GON ) — fell while Western Alliance Bancorporation ( WAL ) traded higher. .
Here are some Wednesday stock trends from Yahoo Finance :
Credit Suisse ( CS ): The bank's major shareholder ruled out further financial support from the lender. The shareholder cited regulatory concerns as a reason for not wanting to invest more capital in the bank.
UBS Group AG ( UBS ): UBS CEO Ralph Hammers said he would not answer "hypothetical questions" after the row with rival Credit Suisse, Bloomberg reported.
Meta Platform ( META ): Meta has announced the layoffs of another 10,000 people. The recruiting team is one of the hardest hit by job cuts, as the company expects to fill 5,000 positions. Citi raised its target price from $228 to $260.
AMC Entertainment ( AMC ): The company said in preliminary polls that shareholders voted to increase the company's stake and convert AMC preferred stock into common stock.
Sentinel One Inc. ( S ): The cybersecurity company reported fourth-quarter earnings, with revenue rising 92% to $126.1 million from $65.6 million a year earlier.
3M Company ( MMM ): Shares trade lower ahead of the company's Investor Day.
Advanced Micro Devices ( AMD ): Large-cap stocks rallied on Tuesday after falling for three days.
In terms of revenue, Adobe ( ADBE ); Otli(OTLI); UiPath(PATH); Five Below will publish its quarterly results on Wednesday.
Dani Romero is a reporter for Yahoo Finance. Follow him on Twitter @daniromerotv
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