US stocks mixed as regional banks fail to shake off fears

NEW YORK – Wall Street stocks ended mostly down on Thursday as regional banks again came under pressure, struggling to shake off investor worries about the sector.

The Dow Jones Industrial Average closed 0.7 per cent lower at 33,309.84, while the broad-based S&P 500 nudged down 0.2 per cent to 4,130.57.

The tech-heavy Nasdaq Composite Index edged up 0.2 per cent to 12,328.51.

The mixed showing came as shares of regional bank PacWest slumped 22.7 per cent, after it reported seeing deposits drop around 9.5 per cent in the week of May 5.

In a filing, it noted that media reports saying it was exploring strategic options fueled fear among customers over the safety of their funds, adding that its total deposits declined 16.9 per cent in the first quarter.

Several other regional lenders saw weakness as well including KeyCorp, Zions Bancorporation and Western Alliance Bancorporation.

“I think there is a legitimate fear of a hard landing,” said Hugh Johnson of Hugh Johnson Economics.

This is being spurred by concerns over regional banks, with deteriorating lending conditions, deposit outflows and a reduction of lending, he added.

Traders are also watching for progress in talks on lifting or suspending the US debt ceiling, as top policymakers head into a meeting Friday in hopes of breaking the impasse.

Further down the line, investors are looking towards the US Federal Reserve’s next moves too, as cooling economic indicators give it more room to consider a pause in further interest rate hikes.

Among individual companies, Disney shares ended 8.7 per cent down after disappointing second-quarter results.

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