Stocks fell Friday as investors pulled back from positions in First Republic and other bank shares amid lingering concerns over the state of the U.S. banking sector.
The Dow Jones Industrial Average lost 384.57 points, or 1.19%, to close at 31,861.98 points. The S&P 500 slid 1.10% to end at 3,916.64 points, while the Nasdaq Composite was down 0.74% to 11,630.51 points.
First Republic slid nearly 33% to end the week down close to 72%. That marked a turn from Thursday's relief bounce, which came when a group of banks said it would aid First Republic with $30 billion in deposits as a sign of confidence in the banking system. Friday's nosedive weighed on the SPDR Regional Banking ETF (KRE), which lost 6% in the session and finished the week 14% lower.
U.S.-listed shares of Credit Suisse closed down nearly 7% as traders parsed through the bank's announcement that it would borrow up to $50 billion francs, or nearly $54 billion, from the Swiss National Bank. The stock lost 24% over the course of the week.
Despite the down session, the S&P 500 advanced 1.43% this week. The Nasdaq Composite gained 4.41% as investors bet on technology and other growth names ahead of next week's Federal Reserve policy meeting. It was the best week since Jan. 13 for the tech-heavy index. But Friday's slide pulled the Dow into negative territory for the week, finishing 0.15% down.
Bank stocks have been closely followed by investors in recent days amid fears that others could face the same fate as Silicon Valley Bank and Signature Bank, which were both closed within the last week. The market has been responding to the latest developments in the sector after regulators said over the weekend that they would backstop deposits in the two banks.
Investors pulled back on Friday ahead of what could potentially be an eventful weekend as the bank crisis plays out, said Keith Buchanan, senior portfolio manager at Globalt Investments.
"There's nervousness into the weekend of: How does this all look on Monday?," he said. "The market is nervous about holding stocks into that."
The shakeup arrives at a time when investors are looking ahead to the Federal Reserve's upcoming meeting on March 21-22. The question on the minds of traders is whether the central bank will proceed with an expected 25 basis point hike even as banking woes whiplash the market.
"The Fed seems to be paying lip service, at least, and being aware of what just happened with the banking sector," said Aoifinn Devitt, chief investment officer at Moneta. "In a way, nothing about the base case has changed, only for the fact that we've had this kind of event in the banking sector causing contagion in terms of sentiment, but not yet really contagion in terms of other banks."
Stocks close Friday down
Stocks ended Friday's session lower.
Despite the down session, the Dow was the only of the major indexes to close the week down. While the 30-stock index saw a weekly loss of 0.2%, the S&P 500 advanced 1.4% for the week and the Nasdaq Composite gained 4.4%.
— Alex Harring
First Republic Bank selloff intensifies as investors look to weekend
First Republic Bank took another leg lower in afternoon trading, plunging more than 30% as investors positioned themselves in the final hour of trading this week. Friday's nosedive has brought the stock down more than 70% from where it started the week.
The drop has also weighed on the SPDR S&P Regional Banking ETF (KRE), which was down 6% on Friday and poised for a weekly loss of more than 14%.
— Alex Harring
Wall Street says bank aid to First Republic should boost confidence in sector
Plans to funnel $30 billion worth of deposits into First Republic should restore confidence in the U.S. financial system, while mitigate the likelihood of future bank runs,
"We view the move by the industry as a positive step to stem contagion amid the regional bank crisis," wrote Evercore ISI's John Pancari in a Thursday note. "We believe the move sends a message of broader stability for the sector and should help further temper depositor fears," and enables the "bank to fight another day."
Read more on how analysts view the latest rescue plan here.
— Samantha Subin
Dow hits session low as investors ready for final hour of day and week
The Dow notched a new low for the session as investors readied for the final hour of the trading day and week.
At one point shortly before 3 p.m. ET, the 30-stock index traded more than 500 points down. It's the only of the three major indexes on track for a weekly loss in what has been a volatile five sessions amid the bank crisis.