By Liz Moyer
Investing.com -- U.S. stocks were sinking as investors continued to worry about the health of the banking sector.
At 10:42 ET (14:42 GMT), the Dow Jones Industrial Average was down 391 points or 1.2% , while the S&P 500 was down 1.1% and the NASDAQ Composite was down 0.7%.
SVB Financial filed for bankruptcy protection early Friday after a run on deposits at its Silicon Valley Bank forced regulators to shut it down. The move allows the parent company time to consider strategic alternatives for its broker-dealer and venture capital arms, which aren’t part of the filing.
It also comes a day after a group of big banks banded together to deposit $30 billion in uninsured funds at First Republic Bank (NYSE:FRC), which had gotten caught up in the sharp selloff of banking stocks since Silicon Valley Bank’s collapse last week.
First Republic suspended its dividend after the move. Its shares were down 23% on Friday.
The shakeout in the banking sector could give the Federal Reserve extra reason to be cautious about interest rates as it heads into next week’s policy meeting. Before SVB’s woes, expectations had grown high that the Fed would raise rates by half a percentage point, as Chair Jerome Powell told Congress the fight against inflation wasn’t over.
But with small and regional banks under pressure, lending could contract and slow the economy. That gives the Fed room to raise rates less aggressively. Most futures traders currently expect a quarter of a percentage point hike.
The University of Michigan's consumer sentiment for March ticked lower to 63.4, below expectations and the 67 prior reading.
FedEx Corporation (NYSE:FDX) shares rose 7.8% after the logistics giant raised its outlook for the full year as cost cutting maneuvers kick in.
Oil continued to fall. Crude Oil WTI Futures were down 3% to $66.33 a barrel while Brent Oil Futures crude was down 2.8% to $72.53 a barrel. Gold Futures rose 2.2% to $1,965.