Wall Street stocks fell decisively Tuesday as banking shares came under renewed pressure amid worries over the sector’s outlook in a weakening US economy.
Near 11:25 am (1525 GMT), the Dow Jones Industrial Average was down 1.7 percent at 33,486.47.
The broad-based S&P 500 also dropped 1.7 percent to 4,095.46, while the tech-rich Nasdaq Composite Index shed 1.5 percent to 12,028.28.
Large banks Wells Fargo and Bank of America shed more than four percent, but the deepest declines came in regional banks that are seen as facing pressure to consolidate given a worsening profit outlook.
Shares of PacWest Bancorp fell 31.9 percent, while Comerica lost 11.8 percent and KeyCorp dropped 9.1 percent.
These banks have been hiking interest payments to customers in an effort to preserve deposits, weakening their outlook. The sector is also expected to see tighter oversight from regulators following bank failures earlier this year.
Market watchers also cited weakness in petroleum-linked shares as crude oil prices fell sharply amid recession worries.
Investors are also looking ahead to Wednesday’s Federal Reserve decision.
Investors generally expect the Fed to lift interest rates again on Wednesday, but are hoping the central bank signals it will then pause on further increases following a series of hikes to counter inflation.
Analysts have warned stocks could fall if the Fed continues to hold to a tough line on inflation and implies additional rate increases to come.
