Wall Street stocks slid early Thursday while the shares of regional bank PacWest plunged after it indicated a fall in deposits – reigniting jitters over the financial sector.
The lender saw deposits drop around 9.5 percent in the week of May 5, on the back of media reports saying it was exploring strategic options, it said in a securities filing.
These headlines fueled fear among customers over the safety of their funds, PacWest said, adding that its total deposits slumped 16.9 percent in the first quarter.
Its stock plummeted 28.8 percent on Thursday morning, while several other regional banks showed weakness as well.
The Dow Jones Industrial Average slumped 0.8 percent to 33,254.71, while the broad-based S&P 500 fell 0.4 percent to 4,119.51.
The tech-heavy Nasdaq Composite Index slipped 0.2 percent to 12,285.10.
Meanwhile, traders assessed a moderation in producer price inflation, and initial jobless claims hit the highest level since late October 2021.
The economic indicators moved in a direction that should leave the Federal Reserve “inclined to hold rates steady when it meets again in June,” said Patrick O’Hare of Briefing.com.
The central bank has been hiking interest rates rapidly over the last year to ease demand and rein in inflation, but there are now signs of cooling.
O’Hare added that the initial claims report in particular reflects a labor market that is becoming less tight.
Among individual companies, shares of Disney slipped 8.4 percent after disappointing second-quarter results.
