brought the S&P 500 at one point below its flatline for the year.
In recent days, a crisis in the financial sector has centered around regional banks as Silicon Valley Bank and Signature Bank collapsed, both casualties of poor management in the face of eight interest rate hikes by the Federal Reserve in the last 12 months. Attention turned to the big banks on Wednesday, with shares of Credit Suisse hitting an all-time low.
Saudi National Bank, Credit Suisse's largest investor, said Wednesday it could not provide any more funding, according to a Reuters report. This comes after the Swiss lender said earlier this week it had found "certain material weaknesses in our internal control over financial reporting" for the years 2021 and 2022.
"You're going to see a credit crunch happening in the United States and that's starting to get priced into the market in a dramatic way," said Mike Novogratz, CEO of Galaxy Digital, a financial technology and investment management firm, said in an interview with CNBC's "Squawk Box."
As Credit Suisse dragged down the European Bank sector, U.S. big bank shares declined in sympathy. Citigroup, Wells Fargo and Goldman Sachs all fell 5%. Bank of America slipped 2%. The Financial Select Sector SPDR Fund (XLF) lost 3.6%, giving up its 2% pop on Tuesday.
Regional banks, which rebounded Tuesday to lift sentiment for the broader market, fell back into the red again. The SPDR S&P Regional Banking ETF (KRE) was down 2.3%, pushed down by losses of more than 10% in First Republic Bank and PacWest Bancorp.
"There's just such so much information to digest," said Dan Eye, chief investment officer at Fort Pitt Capital Group. "Investors (are) scrambling to position around it."
— CNBC's Michelle Fox contributed to this report
