Dow futures drop more than 300 points as Deutsche Bank sparks concerns over global banking system

Soegeefx AppsUS MarketDow futures drop more than 300 points as Deutsche Bank sparks concerns over global banking system

Stock futures fell Friday as Wall Street fretted over the state of the global banking system once again.

Futures tied to the Dow Jones Industrial Averages slid 333 points, or 1.03%. S&P 500 futures dipped 0.84%, while Nasdaq-100 futures were 0.5% lower.

Deutsche Bank’s U.S.-listed shares slid about 11% in the premarket after the the German lender’s credit default swaps jumped. The move appeared to raise concerns once again over the health of the European banking industry. Earlier this month, Swiss regulators forced a UBS acquisition of rival Credit Suisse.

Shares of major U.S. banks were also under pressure. Bank of America, JPMorgan Chase and Wells Fargo fell more than 2% each. Meanwhile, Citigroup fell more than 3%.

“The Silicon Valley Bank problem brought more attention on banks,” Larry McDonald, founder of the Bear Traps Report, said Friday on CNBC’s “Squawk Box.” “And so, banks like Credit Suisse and Deutsche Bank that have been horribly, horribly managed for decades — and we’re talking about really poor management and horrible decisions — all of a sudden, investors around the planet, focus on that.”

Wall Street is coming off a volatile session Thursday that ultimately ended with the major averages posting solid gains. The Nasdaq Composite posted the largest gain, at 1%, as technology shares continued to rally on a hunch that interest rate hikes would be coming to an end. The S&P 500 ended around 0.3% higher, while the Dow finished up 0.2%.

For the week, the Dow and S&P 500 are up around 0.8% each, while the Nasdaq has gained 1.4% through Thursday’s close.

Investors continued to assess the Fed’s latest policy move announced this week. The central bank hiked rates by a quarter-point. However, it also hinted that its rate-hiking campaign may be ending soon. Meanwhile, Fed Chair Jerome Powell noted that credit conditions have tightened, which could put pressure on the economy.

On Thursday, Treasury Secretary Janet Yellen said regulators are prepared to take more action if needed to stabilize U.S. banks. Her comments are the latest among regulators attempting to buoy confidence in the U.S. banking system in the wake of the Silicon Valley Bank and Signature Bank closures.

Source: CNBC

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