March 15, 2023 Global stocks and banking news

Our live coverage of banking fears in global markets has moved here.

Vanessa Pham, co-founder and CEO of Asian food company Omsom talks with CNN's Poppy Harlow.

Vanessa Pham, co-founder and CEO of Asian food company Omsom, felt like her business was facing an existential threat last Friday when she learned her bank, SVB, had gone under.

“We had to run payroll, manufacture product, operate the business, and fundamentally those funds were the lifeline of the business. So it was very challenging,” Pham told CNN’s Poppy Harlow.

What she didn’t do was tell her nine employees that the company might not make payroll.

“I was very committed to ensuring that we were going to take care of our team. Of course with the $250,000 that was insured by the FDIC, that was going to be the first order of business. I communicated that to my team on Friday,” Pham said.

Beyond that, though, she had to battle her fears and plan for worst-case scenarios. But they never came to pass because thanks to the US government’s efforts to step in and backstop all deposits at SVB she had access to all her funds by Monday.

With all the panic in the market, could it get tougher to purchase a home?

A CNN viewer from Philadelphia says he and his wife are looking to purchase their first home.

He asked the panel of guest experts tonight during the CNN primetime special on the banking crisis whether they foresee mortgage rates going up or down as a result of the fallout from the collapse of SVB.

Vivian Tu, a former JPMorgan trader, said she could understand his concern in the current climate.

After Silicon Valley Bank failed on Friday, its customers were filled with fears. But by Monday, they could breathe a sigh of relief — the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corporation?had said over the weekend that it would make each customer whole, even beyond the $250,000 insured by the FDIC.

While it was welcome news for account holders, the extraordinary move raised questions for some, who wondered why the FDIC bent its rules for SVB and its customers.

Eric Krahn, a computer systems engineer from Iowa, asked this question during a CNN primetime event on Wednesday.

“Why does this bank and?account holders get special?treatment to be made fully?whole?” he asked. “How does this inspire?confidence in our system?”

Lynnette Khalfani-Cox, CEO of AskTheMoneyCoach.com, wondered the same thing, she said during the program.

“I do think there’s a little bit?of moral hazard here,” she said, referring to the idea that banks may take on more risk if they think they’ll get bailed out (more from my colleague Allison Morrow on that concept is below).

As to why the FDIC made the decision it did? The Federal government didn’t want SVB’s failure to “have a domino effect,” Khalfani-Cox said. “Federal regulators deemed?them to be in the category of?systemic risk, so they granted an exemption.”

You may hear economists and market analysts reference “moral hazard” when discussing the past weekend’s rescue of two US banks, Silicon Valley Bank and Signature.

“Moral hazard” is somewhat academic shorthand for the idea that banks (or other entities) will take on more risk if they believe that they will ultimately be bailed out.

For example, some argue that SVB should have been allowed to fail — that the pain of the fallout would outweigh the downsides of customers losing their money and startups going out of business. Of course, others note that the risk of letting the 16th-largest US bank collapse, and potentially letting its tech industry customers also fail, could have far-reaching and potentially devastating consequences.

Credit Suisse on Wednesday said it would borrow 50 billion Swiss Francs ($53.7 billion) from the Swiss National Bank, hours after the central bank said it was ready to provide financial support after shares in the country’s second biggest lender crashed as much as 30%.

“Credit Suisse is taking decisive action to pre-emptively strengthen its liquidity,” the bank said in a statement.

Former Treasury Secretary Larry Summers

Former Treasury Secretary Larry Summers told CNN that despite scary headlines, now is not the time for consumers to panic.

“I don’t think this is a time?for panic or alarm,” Summers said. “This is not 2008, where people needed to be worried about where they could get their money…It absolutely is not that.”

“Americans’ money is?safe,” he said.

Is the banking sector in the same situation as the one that triggered the 2008 financial crisis?

That’s what a viewer from Fenton, Missouri, asked the CNN panel of business experts tonight during a CNN primetime special on the banking crisis.

CNN’s chief business correspondent Christine Romans said no.

However, Romans noted that “the verdict is out on the controversy about whether some of these smaller banks were allowed to not partake in all of the Dodd-Frank regulations, and maybe that left them more exposed.”

Some context: Those regulations laid out stricter rules for the banking industry, though small and mid-sized banks — those with assets below $250 billion, like SVB — were exempted from some of the rigorous capital requirements applied to larger institutions, and from the obligation to undergo tests of their ability to withstand financial stress by the Federal Reserve each year.

CNN’s Anna Cooban contributed to this report.

The Swiss National Bank's headquarters in the Swiss capital, Bern, in August 2022.

Switzerland’s central bank said Wednesday it was ready to provide financial support to Credit Suisse after shares in the country’s second biggest lender crashed as much as 30%.?

In a joint statement with the Swiss financial market regulator FINMA, the Swiss National Bank (SNB) said Credit Suisse (CS) met the “strict capital and liquidity requirements” imposed on banks of importance to the wider financial system.?

“If necessary, the SNB will provide CS with liquidity,” they said.

Already on edge after the failure of Silicon Valley Bank in the United States last week, investors dumped shares in the embattled Swiss bank earlier in the day, sending them plummeting to a new record low after its biggest backer appeared to rule out providing any more funding.

In their statement, the Swiss authorities said that the problems of “certain banks in the USA do not pose a direct risk of contagion for the Swiss financial markets.”

“There are no indications of a direct risk of contagion for Swiss institutions due to the current turmoil in the US banking market,” the statement continued.?

Traders work on the floor of the?New?York?Stock?Exchange?on March 15.

Stocks closed mostly lower on Wednesday as investors grappled with the crash of Credit Suisse stock and how the fallout could affect global and domestic markets.

Troubles at the systemically important Swiss lender come as markets struggled to make sense of the collapse of Silicon Valley Bank and Signature Bank.

The Swiss National Bank said Wednesday said that it will provide Credit Suisse with liquidity if necessary, after shares tumbled as much as 30%.

Shares of the bank closed down 24%.

Major US banks continued to get hammered. Shares of Wells Fargo fell 3.2%. JPMorgan Chase stock dropped 4.7%.

The Dow fell roughly 280 points, or 0.87%.

The S&P 500 fell about 0.7%.

The Nasdaq Composite inched up 0.05%.

Nervous bank customers have rushed to the safety of big banks in the wake of a pair of high-profile bank failures that have shaken confidence in the system.

Bank of America, Wells Fargo and Citigroup have all experienced a significant increase in deposits since Silicon Valley Bank ran into trouble last week, people familiar with the matter tell CNN.

Small and regional banks have suffered deposit outflows, though a senior Treasury official told CNN earlier this week that those customer withdrawals have eased.

The situation is fluid and it’s not clear just how much money has been plowed into big banks, though the sum is likely to be in the billions or tens of dollars.?

Traders work on the floor of the New York Stock Exchange on March 15.

Stocks remained down Wednesday afternoon as deepening troubles in the banking sector continued to roil markets.

The Dow was down 350 points, or just over 1%. The S&P 500 slipped by 1%, while the Nasdaq Composite lost 0.8%.

Shares of Swiss lender Credit Suisse tumbled over 20% after its biggest shareholder said it wouldn’t increase funding in the bank, setting off fears about the strength of one of the world’s biggest financial institutions. This comes just days after the collapse of Silicon Valley Bank and Signature Bank sent Wall Street into a frenzy.?

It remains unclear how the two banks’ collapses, and now the crash in Credit Suisse’s stock, will affect global and US markets as well as the economy.

The CME FedWatch Tool shows that traders see a roughly 45% probability that the Fed won’t raise interest rates at its meeting next week. Traders saw a 55% probability of a quarter-point rate hike.

CNN’s Fear & Greed Index was at 18, indicating extreme fear in the market. That shows more fear has entered the market since this morning, when the index clocked in at 22.

Shares of US banks also continued their descent. Wells Fargo stock fell 4.8%. Shares of JPMorgan Chase were down 5.1%.

The bond market has seen heightened volatility as the turmoil in the banking sector roils the equity market. The ICE BofA MOVE Index, which measures volatility in the bond market, surged to levels last seen during the onset of the Covid pandemic in March 2020.

Bond yields fell Wednesday as skittish investors shaken by banking fears sought refuge in safe holdings.

The 2-year Treasury yield on Monday saw its biggest one-day drop since October 1987’s Black Monday, and continued its descent on Wednesday. Long-term Treasury yields also fell.

A woman walks past a branch of Switzerland's Credit Suisse bank in Vevey, western Switzerland, on March 15.

European markets have closed sharply lower as bank stocks across the continent plunged, led by Credit Suisse. Shares in Credit Suisse, one of Switzerland’s biggest banks, crashed more than 20% on Wednesday after its biggest shareholder appeared to rule out providing any more funding for the embattled Swiss lender.

The sell-off spilled over into other European banking shares, with French and German banks such as BNP Paribas, Societe Generale, Commerzbank and Deutsche Bank falling between 8% and 12%.?

In the UK the FTSE 100 ended the day more than 3.5% lower, France’s CAC 40 and the German Xetra Dax both closed more than?3% down.

Only two US banks have failed so far this year, but if it feels like the demises of Silicon Valley Bank and Signature Bank have had an outsize effect on the banking sector … you’re right.

SVB and Signature had a combined $319 billion in assets — which means 2023 is already the second-worst year for US bank failures since the Federal Deposit Insurance Corporation (FDIC) began tracking data in 2001. The worst? 2008’s Great Recession.

Our colleagues Renée Rigdon and Matt Stiles of CNN Digital’s data and graphics team put the failures of 2023, 2008 and other years into visual context with the graphic below.

(By the way: Although?Silvergate collapsed last week,?it hasn’t officially failed, according to the FDIC.)

Lloyd Blankfein, senior chairman and former CEO of Goldman Sachs,?agreed with US Sen. Sherrod Brown’s assessment that more regulation is needed to prevent a situation like Silicon Valley Bank’s collapse from happening again.?

Appearing on CNN’s Erin Burnett Outfront on Tuesday, Blankfein told host Erin Burnett that regional and smaller banks have “the authority to extend the US government’s credit.”?

“And that credit has to be protected — whether it’s a big bank or a little bank,” he said. “And so there’s been a number … of levels of scrutiny and regulation that applies depending on how big the banks are. But I think at this point we recognize that a $250 billion bank is no small bank. And, you know, perhaps a $50 billion bank is no small bank. And even smaller ones.”

“So, I think there’s going to be regulation that normally applies to the biggest banks will probably have to be extended. And that regulation includes bigger stress tests, having to have more capital, and other features that generally make the system safer,” he said.?

Costumers lineup outside of the Silicon Valley Bank headquarters in Santa Clara, California, on March 13.

Lloyd Blankfein, senior chairman and former CEO of Goldman Sachs,?said it was “laughable” that Silicon Valley Bank collapsed because it had board members who belong to minority communities.??

During a conversation with Erin Burnett on CNN’s Erin Burnett Outfront Tuesday, Blankfein reacted to a quote from Florida Governor Ron DeSantis and a Wall Street Journal op-ed by Andy Kessler.?

DeSantis blamed the bank’s collapse on its concern with “DEI [diversity, equity and inclusion] and politics.”

Kessler, meanwhile, wrote, “In its proxy statement, SVB notes that besides 91% of their board being independent and 45% women, they also have “1 Black,” “1 LGBTQ+” and “2 Veterans.” I’m not saying 12 white men would have avoided this mess, but the company may have been distracted by diversity demands.”?

Instead of addressing the quotes head-on, Blankfein said that in retrospect, signs of the bank’s collapse were missed.?

“Banks publish the unrealized losses that are embedded in their portfolios,” he said. “It was there to be seen… It wasn’t seen to be that dangerous given that the bank didn’t have to sell any of those securities. But they certainly did once withdrawals started to be made. And so, in hindsight, it will have appeared to have been in plain sight, and the signals will have been missed. But it became critical only when deposits were withdrawn and the banks needed to sell those out-of the-money securities in order to raise funds.”?

When Burnett asked again if the bank collapsed because it was focused on placing a black person or a gay person on its board, Blankfein responded:?

“I’m not an expert in mass psychology, but I think that’s very unlikely and I think frankly it’s a bit laughable.”?

The US Treasury Department building is seen in Washington, DC, on January 19.

Officials at the Treasury Department are monitoring the situation at Credit Suisse and are in touch with their global counterparts, a Treasury spokesperson told CNN Wednesday.

Shares of Credit Suisse crashed more than 20% Wednesday to a new record low after its biggest backer appeared to rule out providing any more funding for the?embattled Swiss lender.

That brought down the stocks of several European banks, US banks and the broader market along with it.

A pedestrian walks by the First Republic Bank headquarters on March 13 in San Francisco, California.?

First Republic Bank’s credit ratings were downgraded on Wednesday by both Fitch Ratings and S&P Global Ratings on concerns that depositors could pull their cash despite the federal intervention.

Fitch also placed another regional bank, PacWest Bancorp, on watch for a potential credit ratings downgrade of its own.

The moves reflect continued worries about the banking system in the aftermath of the collapse of Silicon Valley Bank and Signature Bank.

“We believe the risk of deposit outflows is elevated at First Republic – despite actions by federal regulators,” S&P wrote in its report.

First Republic shares tumbled 16% to session lows in midday trading following the downgrades.

Both credit ratings firms pointed to the large amount of deposits at First Republic that are uninsured because they are above the $250,000 FDIC limit.

The San Francisco-based lender has a high concentration of deposits among wealth clients in coastal markets in the United States, a characteristic that is now viewed as a “rating weakness” in today’s environment.

“This not only drives a high proportion of uninsured deposits as a percentage of total deposits but also results in deposits that can be less sticky in times of crisis or severe stress,” Fitch said. “Fitch believes this feature of the business model has resulted in franchise erosion following the high profile failures of SVB Financial and Signature Bank, despite the deposit base being more diversified from a sector/industry standpoint.”

From a practical standpoint, a credit ratings downgrade can make it more expensive for banks to borrow.

Both Fitch and S&P warned they could downgrade First Republic further.

A pedestrian carries an umbrella while walking past a Silicon Valley Bank Private branch in San Francisco,, on March 14.

“Bailout” became a curse word in American politics following the?2008 global financial crisis, fueling backlash among people who felt the risks and potential consequences of capitalism didn’t apply to big corporations or the wealthy.

Now the recent?failure of two major banks, Silicon Valley Bank and Signature Bank — and federal intervention to backstop the banks’ uninsured depositors — have pushed the B-word back to the center of the nation’s political and economic debates.

While the back-and-forth about whether this intervention was a bailout can be chalked up to semantics, it raises key questions about the structure of the financial system and who the government protects during moments of crisis — and who it leaves out.

Read more at CNN Business.

Workers at a new home construction site in Trappe, Maryland, on October 28, 2022.

Home builder confidence climbed for the third consecutive month, even as mortgage?rates?climbed higher for buyers.

That’s according to a March report from the National Association of Home Builders that looks at current sales, buyer traffic and the outlook for sales of new construction homes over the next six months.

It was the strongest showing for the index since September.

After pivoting positive in January for the first time in a year, home building looked set to continue improving as construction prospects improve and?inflation?cooled. This has been good news for home buyers who have been facing low inventory amid a decades-long national shortfall in building.

Recent instability concerns in the banking system however, are creating more volatility in interest?rates?and uncertainty for builders.

Mortgage?rates?had climbed more than half a percentage point over the past month. After recent bank failures, however, mortgage?rates?are dropping as investors flock to the relative safety of bonds.

“Builders are highly uncertain about the near- and medium-term outlook” despite expected improvement in mortgage?rates?and March’s improvement in sentiment, said Alicia Huey, NAHB chairman.

The follow-on effects from the banking instability putting pressure on regional banks, as well as continued?Fed?tightening, will be further constraints for homebuilder’s acquisition, development and construction (AD&C) loans, said Robert Dietz, NAHB’s chief economist.

And that will ultimately be passed on to buyers.

“When AD&C loan conditions are tight, lot inventory constricts and adds an additional hurdle to housing affordability,” he said. “The cost and availability of housing inventory remains a critical constraint for prospective home buyers.”

A Brinks armored truck sits parked in front of the shuttered Silicon Valley Bank headquarters on March 10 in Santa Clara, California.?

Bridgewater Associates?founder Ray Dalio?on Tuesday afternoon warned investors that there’s more pain ahead for the global financial system.

Writing in his newsletter, Dalio said that the collapse of Silicon Valley Bank was a “canary in the coal mine” moment that will have knock-on effects “in the venture world and way beyond it.”

By aggressively hiking interest rates, central banks have ushered in a new era for the global economy filled with fallout from contractions in the debt and credit industry, he added.

“I think that it is a very classic event in the very classic bubble-bursting part of the short-term debt cycle,” wrote Dalio. “It is likely that this bank failure will be followed by many more problems before the contraction phase of the cycle runs its course,” he said.

Dalio, who built one of the world’s largest hedge funds and has a net worth of $16.2 billion, added that the 2024 election cycle and rising geopolitical tensions with Russia and China will create more economic risk in the coming years.

“In a nutshell, it looks to me like the next two years will be a very risky time,” he said.

After surging by over 20% in the past few days, bitcoin stumbled Wednesday, falling by 1.7% to $24,213 as investors digested conflicting signals from the market.

While bitcoin’s trajectory is volatile to say the least, one reason for Bitcoin’s recent rally could be traced to a March 13 tweet from Changpeng Zhao, CEO of crypto exchange Binance, Frank said. That tweet said the company would convert into crypto (such as bitcoin and ethereum) the remainder of a $1 billion fund it created to boost the industry’s recovery.

Additionally, recent pressure in the banking sector has led some investors to search for alternative places to park their cash.

“Crypto is a very narrative-driven asset class, and it’s always in search of its next narrative, and when that narrative catches on….” said Frank. “In this case, I think this bitcoin as a hedge against banks has started to catch on a little bit.”

“When an asset surges 20% it’s going to be volatile,” he added.

The U.S. flag flutters outside the New York Stock Exchange on March 13.

The Dow opened the day with a decline of more than 600 points Wednesday as banking fears spread across global markets.

The S&P and Nasdaq slipped roughly 2% and 1.5%, respectively.

Shares of embattled Swiss lender Credit Suisse were down by more than 20% after its biggest shareholder chose not to increase funding. That comes after the bank cited “material weakness” in its financial reporting Tuesday and got rid of executive bonuses.?

Shares of US banks also fell: Wells Fargo was down 4.9% and JPMorgan Chase stock dropped 3.6%.

Wall Street continues to grapple with banking tumult domestically, after the collapse of Silicon Valley Bank and Signature Bank rocked markets last week and early this week. While stocks recouped some of their losses on Tuesday, investors remain wary of the banking fallout and what it means for the Federal Reserve’s interest rate-hiking campaign going forward and the overall stability of the financial sector.

CNN’s Fear & Greed Index was at 22 Wednesday morning, indicating extreme fear in the market.?

Markets also digested the latest economic data giving insight into the state of inflation. The Producer Price Index, a metric measuring prices paid for goods and services by businesses before they’re sold to customers, fell to 4.6% for the 12 months ended in February.?

At the same time, US retail sales fell 0.4% last month, showing that Americans cut back on spending in February after splurging the month before.

Both data points suggest that the Fed is making headway in its fight against inflation. The CME FedWatch Tool showed that traders see a 58.3% probability of a quarter-point rate hike at the central bank’s meeting next week.

Just as the panic over the US banking system appeared to fade, a fresh burst of anxiety blew in from Europe.

Credit Suisse shares crashed more than 20% in Zurich, dragging down European bank stocks along with it. US stock futures fell Wednesday morning after rallying strongly on Tuesday.

What’s the connection between Credit Suisse and SVB? They’re facing unrelated problems that happened to take place at the same time, worrying investors about the banking sector.

“Credit Suisse has been a slowing-moving car crash for years,” wrote Peter Boockvar, chief investment officer of Bleakley Financial Group. “But now today’s news of course is happening in the vortex of SVB.”

The “global bank psychology” is already fragile, Boockvar said. Investors around the world were thoroughly rattled by the collapse of Silicon Valley Bank and Signature, making the banking sector particularly vulnerable to any signs of trouble.

Did the SVB mess cause Credit Suisse shares to tank? No. But are European and US banks facing a similar macro environment of suddenly-higher interest rates following a decade or more of low (or even negative) rates? Yes.

People dine in a restaurant in Alexandria, VA, on February 17.

Americans pulled back on their spending last month after a surprisingly spendy January.?

US retail sales fell 0.4% in February from the month before, which was revised up to 3.3%, the Department of Commerce reported on Wednesday.?

That decline, which was adjusted for seasonal swings, was greater than economists’ expectations of a 0.3% decline, according to Refinitiv estimates.

Retail sales data is not adjusted for inflation.?

A key measure of inflation fell dramatically in February, according to the latest Producer Price Index, which tracks what America’s producers get paid for their goods and services.

Producer price increases slowed to an annual pace of 4.6% last month, significantly down from a revised 5.7% in January, the Labor Department reported Wednesday. February prices fell by 0.1% after rising 0.7% in January.

Economists surveyed by Refinitiv had been expecting the 12-month rise in wholesale prices to slow to a 5.4% increase.

A Credit Suisse branch in Basel, Switzerland, on October 25, 2022.

Shares of several top European banks have been halted Wednesday as the fallout from Credit Suisse’s crisis of confidence spilled out throughout the sector.

French and German banks such as BNP Paribas, Societe Generale, Commerzbank and Deutsche Bank were falling.

Several bank stocks were halted, triggering automatic circuit breakers designed to give investors a breather and prevent stocks from rapidly collapsing.

Among them:

– Credit Suisse, which fell more than 20%

– Monte dei Paschi, -6%

– UniCredit, -7%

A view of the Park Avenue location of Silicon Valley Bank (SVB), in New York City on March 13.

In an annual letter to shareholders, BlackRock CEO Larry Fink said the fallout from Silicon Valley Bank’s collapse may not be over.

“It’s too early to know how widespread the damage is,” Fink wrote. “The regulatory response has so far been swift, and decisive actions have helped stave off contagion risks. But markets remain on edge. Will asset-liability mismatches be the second domino to fall?”

Fear has certainly spread. The punishment America’s regional banks took in the wake of SVB’s collapse appears to have ebbed. But in Europe, bank stocks were tumbling after Credit Suisse’s biggest shareholder said it wouldn’t invest any additional capital in the deeply troubled bank.

Fink noted the Federal Reserve’s historic pace of rate hikes created a domino effect that ultimately led to SVB’s collapse. In the past, similar rate-hiking situations have led to “spectacular financial flameouts,” including the decade-long savings and loan crisis.

But Fink doesn’t think the Fed is about to reverse course — he expects the central bank will keep rates high for quite some time, as leaders in the public and private sector trade efficiency and lower costs for supply chain resilience and national security.

That’s one of the reasons, he writes,?“that I believe inflation will persist and be more difficult for central bankers to tame.?As a result, I believe inflation is more likely to stay closer to 3.5% or 4% in the next few years.”

Credit Suisse’s shares were trading down nearly 22% in Zurich on Wednesday, and the cost of buying insurance against the risk of a Credit Suisse default hit a new record high, according to S&P Global Market Intelligence.

The crash spilled over into other European banking shares, with French and German banks such as BNP Paribas, Societe Generale, Commerzbank and Deutsche Bank falling between 8% and 10%.

Customers withdrew billions from Credit Suisse last year, contributing to the bank’s biggest annual loss since the global financial crisis in 2008. And the blows keep coming for Switzerland’s second biggest bank.

On Tuesday, it acknowledged “material weakness” in its financial reporting and scrapped bonuses for top executives.

Speaking to Bloomberg TV on Tuesday, Credit Suisse CEO Ulrich K?rner said the bank saw “material good inflows” of money on Monday, even as markets were spooked by the collapse of Silicon Valley Bank and Signature Bank in the United States.

Outflows from the bank had “significantly moderated” after customers withdrew 111 billion francs ($122 billion) in the three months to December, K?rner added. In its annual report, the bank said outflows had not yet reversed by the end of last year.

K?rner said the collapse of SVB was “somewhat of an isolated problem.” Credit Suisse follows “materially different and higher standards when it comes to capital funding, liquidity and so on,” he added.

A Credit Suisse office building is seen in Zurich, Switzerland, in October 2022.

Shares of Credit Suisse crashed more than 20% to a record low after its biggest shareholder appeared to rule out providing any more funding for the?embattled Swiss lender.

In an interview with Bloomberg, the chairman of the Saudi National Bank said it would not increase its stake in the Swiss lender.

“The answer is absolutely not, for many reasons. I’ll cite the simplest reason, which is regulatory and statutory. We now own 9.8% of the bank — if we go above 10% all kinds of new rules kick in, whether be it by our regulator or the European regulator or the Swiss regulator,” Ammar Al Khudairy told Bloomberg. “We’re not inclined to get into a new regulatory regime.”

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Stocks: US stock futures tumbled after the Saudis said they would not bail out Credit Suisse, injecting new fear into the global banking system. Investors continue to wrestle with the SVB failure fallout and what it might mean for the Fed’s ability to balance its battle with inflation and the need to keep the banking sector secure. And key economic reports on inflation and retail sales also weighed on Wall Street.

Dow futures were down 500 points, or 1.5%. S&P 500 futures fell 1.6%. Nasdaq Composite futures were 1.4% lower.??

Fear & Greed Index: 23 = Extreme Fear?

Oil & gas: US oil prices were down 0.2% to $71 a barrel. Average US gas prices held steady at $3.47 a gallon.

US retail sales data for February, which are an important indicator of consumer spending and the health of the economy, is due Wednesday morning at 8:30 a.m. ET. This spending accounts for the majority of US economic activity and is closely watched by the Federal Reserve.?

Analysts expect a significant drop in February, with sales decreasing by 0.3% — last month saw a 3% gain. But in this bad-is-good economy, that might give Wall Street a reason to celebrate, since it could mean the central bank will feel pressure to ease its rate hiking regimen.?

February’s US Producer Price Index, which measures what suppliers are charging businesses, is expected to come in at 5.4% year over year (down from 6% in January) and 0.3% month over month (down from 0.7% in January).?

PPI is one of several closely watched inflation gauges. Because the producer-centric index captures price shifts upstream of the consumer, it’s sometimes looked to as a potential leading indicator of how prices may eventually land at the store level.

Federal Reserve policymakers will be examining this data ahead of their two-day meeting next week. The central bank is largely expected to increase rates by another quarter point, according to CME Group’s FedWatch tool.

Last week, the Federal Reserve’s biggest concern was?a stubbornly high inflation rate?and?how much to crank up monetary policy tightening.

In recent days,?a new bogeyman emerged?in the form of a?trio?of?bank?failures?and the?chilling specter of a financial crisis.

To stave off the latter,?the Fed offered a solution?that seemingly contradicted its hawkish flight path: looser purse-strings.

On Sunday, the central bank announced the creation of the?Bank Term Funding Program, which will provide one-year loans to banks, credit unions and other financial institutions that offer up collateral such as US Treasuries, agency debt and mortgage-backed securities.

Those investments are typically safe, but have crumbled in value during the Fed’s aggressive rate-hiking campaign. Banks were sitting on about $620 billion in unrealized losses at the end of last year, according to the FDIC. So the Fed’s new facility would let banks swap them out for a loan of up to one year worth the original value of the assets they’re ponying up as collateral.

The Fed is engaging in a bit of ‘push and pull’ by offering this liquidity option at a time when it seeks to cool the economy, but the potential benefits of stepping in outweighed the risks, economists say. The program is designed to be used in an emergency to stave off the next SBV from failing — not to kick off a new era of free spending.