Wall Street ends in disarray, with hopes of a resolution to the Credit Suisse crisis

The New York Stock Exchange ended on a mixed note on Wednesday, limiting the damage after seeing a positive sign in the intervention of the Swiss authorities to contain the fall of Credit Suisse, the last establishment heckled by the earthquake which agitated the banking sector.

The Dow Jones fell 0.87%, the Nasdaq index gained 0.05% and the broader S&P 500 index fell 0.69%.

The session had started in the red, misguided by the stall on the stock market of Credit Suisse, after the Saudi National Bank indicated that it would not increase its stake in the capital of the Swiss establishment.

The Dow Jones, where the financial sector is well represented, was particularly affected and dropped up to 2.25%.

But Wall Street regained color after the announcement of discussions between the Swiss authorities and Credit Suisse to find a way out of the crisis of confidence suffered by the bank, already entangled in a series of losses and scandals for several years.

The Swiss central bank (SNB) announced at the end of the day that it was ready to make liquidity available to the Zurich institution “if necessary”.

“There are only two big Swiss banks,” observed Jack Ablin of Cresset Capital. “I don’t see them letting one of them fail. That’s the perception of investors.”

On the wire, the Nasdaq index even managed to finish in the green, driven by giant capitalizations like Alphabet (+2.44%), Microsoft (+1.78%) and Meta (+1.92%).

In addition to their capitalization, the first two benefit from their announcements linked to so-called generative artificial intelligence, while Meta has had the wind at its back since its CEO, Mark Zuckerberg, unveiled on Tuesday a new plan for 10,000 deletions of jobs.

The Dow Jones, he remained weighted by the banking stocks Goldman Sachs (-3.09%) and JPMorgan Chase (-4.72%).

“Trading is subject to emotion and investors are on high alert and attentive to any news relating to banks, because they are very interconnected”, according to Jack Ablin.

Already in agony on Monday, the Californian regional American banks First Republic (-21.37%) and PacWest (-12.87%) were again targeted. But some establishments that had been affected at the start of the week, such as Western Alliance (+8.30%) or Comerica (+3.06%), managed to continue the rebound started on Tuesday.

“There is this apprehension that one bankruptcy will cause another,” explained Jack Ablin. “But I don’t think that’s happening, because the asset quality is very good and the defaults (already happened) are due to deposits. So it’s a very different situation from the financial crisis.”

Another ball for the Dow Jones, the oil companies, hard pressed by the skid of crude prices, which ended at their lowest closing level since December 2021. Chevron (-4.33%), ExxonMobil (-4.97% ) and Occidental Petroleum (-5.63%) were all sanctioned.

Beyond that, the entire commodities sector was deserted, like steelmakers US Steel (-9.65%) and Cleveland-Cliffs (-8.88%), investors fearing a plunge from economy and demand.

Despite the turbulence in the banking sector, the New York market has managed to limit its losses since Friday.

“I don’t think we are dealing with a wave of sales, but there are no buyers,” said Jack Ablin.

A sign of some appeasement at the end of the session, bond rates recovered. The yield on 2-year US government bonds, currently the most followed, stood at 3.87%, after falling earlier to 3.71%, a six-month low.