Wall Street ends down amid US regional banks concerns

·3-min read

Wall Street has ended lower after PacWest's move to explore strategic options deepened fears about the health of US lenders and hit shares of regional banks as well as JPMorgan Chase, Wells Fargo & Co and other major financial players.

PacWest Bancorp tumbled 51 per cent after it confirmed it was exploring strategic options, including a sale.

Shares of the regional lender and other banks got hammered recently on fears of a worsening banking crisis.

Western Alliance Bancorp plummeted almost 39 per cent, with trading in the stock halted multiple times.

At its session low, Western Alliance shares were down more than 60 per cent and the lender denied a report that it was exploring a potential sale.

Comerica and Zion Bancorporation both lost about 12 per cent.

The KBW Regional Banking index ended down 3.5 per cent, bouncing off its session low which was down about 7.0 per cent.

Canada's Toronto-Dominion Bank Group called off its $US13.4 billion ($A20.0 billion) acquisition of First Horizon Corp, triggering a 33 per cent slump in the US bank's shares.

"Regional banks and tightening credit conditions are weighing on the market as investors try to recalibrate on where we are in terms of credit cycles and bank lending standards, and when a potential recession may hit," said Zhe Shen, managing director of diversifying strategies at TIFF Investment Management.

The CBOE volatility index, also known as Wall Street's fear gauge, rose to as much as 21 points, its highest since late March.

Of the 11 S&P 500 sector indexes, nine declined, led lower by financials, down 1.29 per cent, followed by a 1.26 per cent loss in communication services.

The S&P 500 declined 0.72 per cent to end the session at 4,061.22 points. It was its fourth straight session of declines, the first such streak since February

The Nasdaq declined 0.49 per cent to 11,966.40 points, while Dow Jones Industrial Average declined 0.86 per cent to 33,127.74 points.

Volume on US exchanges was relatively heavy, with 12.0 billion shares traded, compared to an average of 10.5 billion shares over the previous 20 sessions.

On Sunday, regulators seized troubled First Republic Bank and JPMorgan Chase agreed to buy majority of its assets, marking the largest US bank failure since the 2008 financial crisis.

With investors increasingly worried a widening banking crisis and an economic downturn, US interest rate futures prices now imply traders mostly expect the US Federal Reserve to cut rates by the central bank's July meeting, according to CME Group's FedWatch Tool.

The Fed on Wednesday raised interest rates by 25 basis points, while Chair Jerome Powell said that it was too soon to say with certainty that the rate-hike cycle was over as inflation remains the chief concern.

Among the largest US banks, JPMorgan dropped 1.4 per cent and Wells Fargo lost 4.25 per cent.

Data on Thursday showed the number of people in the US filing new claims for jobless benefits increased last week as the labour market gradually softens amid higher interest rates, which are cooling demand in the economy.

Apple Inc dipped 1.0 per cent, with the iPhone maker is set to report quarterly results after the closing bell, including an update on its funds set aside for buybacks.

Moderna Inc jumped 3.2 per cent following stronger-than-expected sales for its COVID-19 vaccine for the first quarter.

Qualcomm Inc slumped 5.5 per cent after the chip designer's third-quarter forecasts missed estimates, while Paramount Global Inc tanked about 28 per cent after missing first-quarter revenue estimates amid a weak advertising market in its TV business.

Declining stocks outnumbered rising ones within the S&P 500 by a 2.4-to-one ratio.

The S&P 500 posted 4 new highs and 27 new lows; the Nasdaq recorded 47 new highs and 412 new lows.