Stock market today: Wall Street sinks as bank fears flare

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Asian stocks have risen while Europe markets opened lower after the Federal Reserve raised its benchmark lending rate again to cool inflation and said it wasn’t sure what may come next.

FILE - The New York Stock Exchange on Wednesday, June 29, 2022 in New York. – Stocks sank on Wall Street Thursday as worries cranked higher about a cracking U.S. banking system.

Wall Street has been hunting for other possible weak links in the system, which could see a swift exodus of customer deposits as the industry contends with. PacWest said overnight that it’s considering its options and that several potential partners and investors have approached it. It also said that its core customer deposits have increased since the end of March.

First Horizon, meanwhile, dropped 33.2% after it and TD Bank Group agreed to call off their merger deal. TD told First Horizon it did not know when it could get regulatory approvals for the deal. The Fed has jacked up rates at the fastest pace in decades to knock down high inflation. But it does that by slowing the economy, raising the risk of a recession and hurting prices for investments. Many of the loans made and bonds bought by banks when rates were low are suddenly worth much less in today's market.

Higher rates mean investors are getting paid higher yields for owning bonds, which in turn offers more protection for future shakiness in the market, Allspring's Bory said. “Investing in fixed income today is actually kind of the best it’s been in one and a half decades,” he said.

 

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PacWest stock plummets more than 50% after report of potential sale; other bank stocks fall tooPacWest Bancorp shares tumbled more than 50% in after-hours trading Wednesday, taking other bank stocks with it after a report that the company’s executives were weighing a possible sale.
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