The stock market struggled to hold early sell-off lows midday Wednesday. Treasury yields fell after Credit Suisse stock plummeted in the latest chapter of the banking crisis.
The S&P 500 tripped more than 1.5% but still traded above Monday's low. Its year-to-date gain has nearly vanished, down to less than 1%.
The Nasdaq composite, which has a modest 4% exposure to financials, pared its loss to 0.9% as selling spread to tech, health care and just about every other S&P sector except utilities.
Financials hurt the Dow Jones Industrial Average once again, dropping the megacap index 1.8%. The Russell 2000 led the downside, losing 2.7%.
Volume rose on the NYSE and Nasdaq compared to the same time on Tuesday.
The yield on the 10-year Treasury lost 23 basis points to 3.41%. Investor fear as measured by the Cboe Market Volatility Index, or VIX, climbed 18% to 28.
Oil Price Falls Below $70, Sector Reels
With rising worries of a global recession, the price of U.S. crude oil fell 6.7% to below $66.50 per barrel at midday. Energy Select Sector SPDR was the weakest sector ETF, down 4.6%.
Since December, the price of U.S. crude has been in a range between $70 and $80 per barrel.
Yet, the energy ETF is showing weaker action. Energy Select Sector this week tumbled below the 200-day moving average, and the chart shows a pattern of lower highs and lower lows since late January.
There's no clear support level until perhaps 68, where the ETF bottomed in September.
Among oil stocks deteriorating, oil field services providers Tidewater, SLB and Halliburton are decaying. A breakout for International Seaways seems to be failing.
But in a research note today, Wells Fargo sounded optimistic about oil prices.
"Overall, despite the expected recession, we believe that tight supply, China's reopening, and the effects of the commodity bull supercycle will be supportive of higher oil prices, most likely to be seen in the latter half of 2023," strategists John LaForge and Mason Mendez wrote in a report.
European Stock Market: Credit Suisse Revives Contagion Worries
The banking crisis took a turn for the worse overnight. The chairman of Saudi National Bank, Credit Suisse's largest shareholder, balked at additional financial assistance. And on Tuesday, Credit Suisse released its delayed annual report, which warned of "material weaknesses" to its financial controls.
Chairman Axel Lehmann said Wednesday that its capital and balance sheet remain strong. The Zurich-based bank has been dealing with multiple problems for months. Its U.S.-traded shares plummeted 22% at midday to 1.95, and have been below $10 per share for more than a year.
European stock markets plunged. The Paris CAC 40 slid 3% while the London FTSE 100 fell 3.1% and German DAX lost 2.6%. Major Asian markets avoided the bad news and closed higher.
Regional bank stocks remain under pressure, as depositors seek perceived safer places to put their money. SPDR S&P Regional Bank ETF trimmed its loss to 1.2%.
Banks Broadly Lower In Today's Stock Market
Among major U.S. banks, JPMorgan Chase fell 4.7%. Wells Fargo lost 4.5%, Bank of America 1.5%, Bank of New York Mellon 3.9% and Citigroup 5%.
SPDR S&P Bank ETF shed 2% and is down 10% for the week.
The Innovator IBD 50 ETF, which has no exposure to financials, still lost 3.1%. Two components looked to be in trouble.
Industrial and electronic parts supplier Wesco International gapped below its 50-day moving average, wiping out a gain of nearly 20% from its 147.15 buy point. That's a sell signal.
Hyatt Hotels fell 4.5% and is trading below the 50-day moving average. It has given up gains from a 108.20 buy point and is back near a 103.60 handle entry.
Stock Market Today: Inflation Data Cools
Credit Suisse's problems overshadowed an encouraging inflation report.
The February producer price index (PPI) fell 0.1% from the previous month and climbed 4.6% on an annual basis. Both were below economists forecasts. Core wholesale prices, which exclude food and energy, also cooled more than expected, flat on a monthly basis and up 4.4% annualized.
But in a bit of a damper, U.S. retail sales fell 0.4% in February. Economists had forecast a 0.3% month-over-month decline. Sales excluding vehicles eased 0.1%, vs. estimates for a 0.2% increase.
The latest data support the case for the Fed to pause raising interest rates.
"While the market this morning is under pressure with Credit Suisse's ongoing issues, the specific inflation-related news should help assure the Fed that its campaign to quell inflation is moving in the right direction," said Quincy Krosby, chief global strategist for LPL Financial.
And the slowdown in retail spending "is a necessary component towards bringing inflation closer towards the Fed's terminal rate," Krosby added. Together, the data should solidify the odds of a 25-basis point rate hike next week, if the Fed raises at all.
