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| Banking Concerns Send Stocks Tumbling in Canada and the United States |
Stocks in Canada and the United States experienced losses on Wednesday amid concerns over the future of the banking sector. The Toronto Stock Exchange (TSX) fell 1.6%, or 315.32 points, to close at 19,378.84, while the Canadian dollar dropped 0.36 cents to 72.68 cents U.S. Energy stocks were hit hardest, with Africa Oil falling 8.7% and Enerplus dropping 9%. The banking sector also saw significant declines, with CI Financial falling 5.5% and National Bank sinking 4.2%. The TSX Venture Exchange fell 2.4% to 595.52.
Meanwhile, in the United States, the Dow Jones Industrial Average fell 280.83 points to 31,874.57, while the S&P 500 dropped 27.36 points to 3,891.93. The NASDAQ Composite managed to climb into positive territory, up 5.9 points to 11,434.05. The financial sector was the focus of concern, as investors contemplated the future of Credit Suisse, a bank with a large international and U.S. presence. The bank had said earlier this week that it had found “certain material weaknesses in our internal control over financial reporting” for the years 2021 and 2022. Credit Suisse shares fell nearly 14%.
The recent crisis involving Silicon Valley Bank and Signature Bank, both casualties of poor management in the face of eight interest rate hikes by the Federal Reserve in the last 12 months, has also contributed to investor unease. The European banking sector, including Credit Suisse, was hit particularly hard, which in turn dragged down U.S. big bank shares, with Citigroup sliding 5% and Wells Fargo and Goldman Sachs each losing 3%. Regional banks, which rebounded on Tuesday, fell back into the red again.
Gold prices gained $11.70 to $1,922.60 U.S. an ounce, while oil prices fell $3 to $68.33 U.S. a barrel. The TSX and U.S. indexes regained some ground in afternoon trading following an announcement from a Swiss regulator that the country’s central bank would provide Credit Suisse liquidity if necessary. Nevertheless, the uncertainty over the future of the banking sector has left investors cautious about the stock market's immediate future.
