Wall St. down as Credit Suisse sparks fresh bank selloff

STORY: Volatile trading gripped Wall Street Wednesday as fears of a banking crisis were revived.

Stocks plunged sharply, then pared losses, with the major indexes closing mixed on the day.

The Dow shed just under one percent, the S&P 500 shed seven-tenths of a percent and the Nasdaq closed up a hair.

Trouble at Credit Suisse piled more pressure on the banking sector….

U.S.-listed shares of the Swiss bank hit a record low after its largest investor said it could not provide more financing to the bank. But by the end of the day Switzerland's central bank pledged to fund Credit Suisse with liquidity "if necessary”.

The panic came just one day after shares of U.S. banks staged a strong recovery, with regulators enacting emergency measures to prevent contagion after the collapse of SVB Financial and Signature Bank.

Some investors believe aggressive U.S. interest rate hikes by the Federal Reserve caused cracks in the financial system.

Joy Yang, Head of Global Product Management and Marketing at MarketVector Indexes, equates the Fed’s policy with “using a wrecking ball instead of a scalpel.”

“In using this wrecking ball, they can kind of throw it at a target, but what we’ve realized is that this ball’s coming back. So some of the damage that we’re seeing now is really kind of what was happening with their intervention with monetary easing, and so we’ve yet to see what’s going to happen with monetary tightening and what damage is going to come out of that.”

First Republic Bank tumbled more than 21% while PacWest plunged nearly 13%. Trading was halted several times for volatility.

Big U.S. banks including JPMorgan Chase, Citigroup and Bank of America also dropped.

U.S. Treasury yields fell, with traders now expecting equal chances of a 25-basis-point rate hike and a pause at the Fed's meeting next week.