US stocks notched their worst day in two weeks after a rout in bank shares picked up steam on concerns pockets of trouble in the sector could portend broader dangers. Treasuries rallied.
The S&P 500 fell to the lowest since Jan. 19 with financial companies in the index plunging more than 4%. The KBW Bank Index, which includes regional lenders, plunged 7.7%. Banks came under fire after Silvergate Capital Corp. collapsed overnight amid growing scrutiny in Washington. SVB Financial Group plummeted by a record amount following a stock sale to shore up losses.
"Everybody has been concerned that higher interest rates will lead to higher defaults at some point in 2023, and this raises those questions even more," said Matt Maley, chief market strategist at Miller Tabak + Co.
Cryptocurrencies slid with Bitcoin falling the most since November amid Silvergate's meltdown.
"Banks and semis are two groups that historically have been very good leading indicators. Typically, markets can do OK if either of them are languishing, but when one of them is having an outsized move it's usually wise to listen," said Jonathan Krinsky, chief market technician at BTIG. "In this case, the outsized move is clearly banks to the downside."
Stocks erased early session gains after Thursday's data showed weekly jobless claims had risen to 211,000 during the week ending March 4, ahead of expectations for 195,000 and marking the first time claims surpassed 200,000 since early January.
