The Dow Jones index dropped 0.86% to 33,127.74 points and the S&P 500 gave up 0.72% to 4,061.22 points, to fall to their lowest since late March, while the Nasdaq fell 0.49% to 11,966.40 points.

Within the S&P, the banking sector led the decline (-1.39%), with some regional banks losing up to half of their stock market valuation.

Thus PacWest fell 50.62%, its title falling to 3.17 dollars.

The Californian bank had indicated overnight that it was examining sales of strategic assets. However, it said it had not recorded "exceptional movements" in its deposits, after the collapse of First Republic Bank, which had to be bought in disaster last weekend by JPMorgan Chase.

Western Alliance collapsed 38.52% and Zions Bancorporation 12%.

The big banks also bore the brunt of this turbulence: JPMorgan fell 1.37%, Bank of America -3.09% and Wells Fargo -4.23%.

"We are witnessing a self-fulfilling prophecy," Tom Cahill of Ventura Wealth Management told AFP: "between short selling that follows negative information, which then lowers prices." These short selling consist of borrowing a security by betting on its decline.

Asked at a press briefing about the possibility of suspending short selling -- as was done in 2008--, a White House spokeswoman said that "the government is closely monitoring market events, including short selling of bank securities."

As a leader, many investors pointed to the rapid rise in the Fed's key rates, which have risen in about a year, from zero to more than 5%. "And the last 25 basis point hike on Wednesday was not a good idea," Cahill said.

For Shaun Osborne of Scotiabank, "the Fed's tighter monetary policy only drives up funding costs and risks driving up more capital flight deposited in regional banks."

The next step for the market will be, as early as Friday, the release of official US employment figures.

A downside surprise in job creation could calm trade by easing bond yields and implying that the Fed will at least pause rate hikes. But nothing is less certain: the market should have created another 180,000 jobs in April against 236,000 in March, according to forecasts.

Paramount Global plunged 28.35% to $16.40 after reporting a quarterly loss of $1.12 billion, despite a rise in subscribers to its streaming service.

After the close, Apple (-0.99%) climbed 1.21%, as the group's profits exceeded expectations for the second quarter and its sales fell less than expected.

Wall Street also welcomed a newcomer to the listing: Kenvue, the hygiene and consumer care products branch (Neutrogena, Aveeno, Band-Aid), of the pharmaceutical giant Johnson & Johnson (J&J), was listed on the stock market at a price of $ 22. The stock climbed 22.27% to $26.90.

This transaction is the largest IPO of the year, having allowed J&J, which retains control of 91% of this subsidiary, to raise $ 3.8 billion.

© 2023 AFP