Dow drops 500 points as bank fears spread

New York (CNN) The Dow started the day down more than 500 points Wednesday as bank fears spread across global markets, though the index reversed the losses to finish the day down about 281 points, or 0.9%.

The S&P and Nasdaq fell about 2% and 1.5% respectively earlier in the session. The S&P closed about 0.7% lower, while the Nasdaq posted slight gains for the day.

The New York-listed stocks (CS) embattled Swiss lender Credit Suisse was down as much as 30% earlier in the day after its largest shareholder opted not to increase its funding, after the bank cited “material weakness” in its financial report on Tuesday and scrapped executive bonuses .

Credit Suisse shares eventually closed about 24% lower. The Swiss central bank said late Wednesday that it is ready to provide financial support to Credit Suisse if needed.

Shares of US-based banks also fell: Wells Fargo (WFC) closed about 3.3% and JPMorgan Chase (JPM) share fell 4.7%.

Wall Street also continues to grapple with domestic banking turmoil after the collapse of Silicon Valley Bank and Signature Bank rocked markets last week and early this week. While stocks recovered some of their losses on Tuesday, investors remain wary of the bank’s impact and what it means for the Federal Reserve’s future rate-hike campaign and for the overall stability of the financial sector.

CNN’s Fear & Greed Index stood at 22 Wednesday morning and fell to around 20 late afternoon, indicating extreme fear in the market.

Markets also processed the latest economic data that gave insight into inflation. The Producer Price Index, a measure that measures the prices paid by companies for goods and services before they are sold to customers, fell to 4.6% for the 12 months ended February.

At the same time, US retail sales fell 0.4% last month, showing that Americans cut spending in February after saving the previous month.

Both data indicate that the Fed is making progress in its fight against inflation. The CME FedWatch Tool showed that traders see a 58.3% chance of a quarter-point rate hike at the central bank meeting next week.

Following the collapse of Silicon Valley Bank, the largest U.S. bank failure since 2008, CNN is hosting a special on the crisis that looks at what it means for banks and their customers everywhere. Watch “Bank Bust: What’s Next for America’s Money” tonight, March 15, at 9 p.m. ET.