Swiss regulators stepped in to reassure global financial markets after fresh fears about the viability of Credit Suisse threatened wider fallout just days after two historic U.S. bank failures.
The Swiss National Bank offered the embattled lender financial support if necessary in a statement issued late Wednesday, a move that helped markets pare some of the day’s steep losses.
Credit Suisse shares closed 14% lower in U.S. trading. Other bank stocks took hits, as well, with JPMorgan closing down 4% and Wells Fargo and Goldman Sachs closing down about 3%. Bank of America closed down less than 1%.
The broader Dow Jones Industrial Index ended Wednesday’s session down about 280 points — roughly 0.9% — while the S&P 500 closed 0.7% lower. The tech-heavy Nasdaq finished the day roughly flat.
Analysts said the turmoil increased the likelihood that the Federal Reserve will hold its fire on raising interest rates aggressively when it meets next week, even as inflation remains elevated.
The risk of roiling markets further “makes it more likely that they pass on raising rates,” Pantheon Macroeconomics Chief Economist Ian Shepherdson wrote in a note to clients late Wednesday. “It is more important, in our view, not to take risks with the stability of the system than to reassert your determination to fight inflation.”
Wednesday’s broad-based fallout was sparked in part when Credit Suisse’s largest shareholder, Saudi National Bank, said it had ruled out adding to its existing investments to help steady the embattled lender.
Credit Suisse shares had tanked as much as 25% in morning trading, and the turmoil quickly spread across the banking sector and beyond. Even traditionally safer assets, including U.S. government bonds, took a pummeling, although yields began to tick back up before markets closed.