US Dow Plummets 280 Points Amid Uncertain Future of Credit Suisse

US stocks suffered losses on Wednesday as the banking crisis set in motion last week by the collapse of Silicon Valley Bank has continued to create waves across the financial sector, impacting international markets in a major way earlier on Wednesday.

The Dow Jones fell by 280.83 points on Wednesday, a 0.87% decline to end at 31,874.57. The Nasdaq Composite fared better, climbing back into positive territory by the closing bell to gain 5.90 points and end at 11,434.05. And the S&P 500 suffered a loss of 27.36 points, a 0.7% decline to finish at 3,891.93.

Still, the losses were not nearly as bad as they could have been. Earlier on Wednesday, the Saudi National Bank, the top investor in the Switzerland-based Credit Suisse, said it would “absolutely not” give financial help to the Swiss bank after it reported both major losses in 2022 and the discovery of major monitoring issues.

That news, combined with continuing woes by the US-based First Republic Bank, caused major losses in banks across Europe.

However, the Swiss Financial Market Supervisory Authority and Swiss National Bank both later stepped in and said they would not allow Credit Suisse to collapse, providing it with additional liquidity as necessary.

The Zurich-based bank “meets the capital and liquidity requirements imposed on systemically important banks,” the regulator said, adding that the collapse of two US-based banks in the last week would not affect Swiss banking.

Last Friday, the California-based SVB folded on itself amid a bank run triggered by fears it didn't have sufficient cash on hand to pay depositors. The US Federal Deposit Insurance Corporation (FDIC) took over the bank, announced it would pay out to depositors up to $250,000 worth of their deposits at the bank, and then dissolve the institution completely. Two days later, the same happened to Signature Bank, sparking fears that a new financial collapse akin to the 2008 crash was beginning to unfold.

The White House has struggled to assuage such fears, including agreeing to save uninsured deposits at the banks in question, prompting renewed outcries about the government's willingness to treat risk-taking banks as "too big to fail" but not providing similar grace to ordinary US citizens.