Wall St ends sharply lower on bank contagion fears

Wall Street closed lower on Friday, marking the end of a tumultuous week dominated by an unfolding crisis in the banking sector and the gathering storm clouds of possible recession.

All three indexes ended the session deep in negative territory, with financial stocks (.SPNY) down the most among the major sectors of the S&P 500.

For the week, while the benchmark S&P 500 ended higher than last Friday’s close, the Nasdaq and the Dow posted weekly declines, reported Reuters.

SVB Financial Group (SIVB.O) announced it would seek Chapter 11 bankruptcy protection, the latest development in an ongoing drama that began last week with the collapse of Silicon Valley Bank and Signature Bank (SBNY.O), which sparked fears of contagion throughout the global banking system.

“(The sell-off) is a bit of an overreaction,” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. “However, there is validity to some of the concerns regarding overall liquidity and a potential liquidity crunch.”

Those concerns have spread to Europe, as Credit Suisse (CSGN.S) shares stumbled over liquidity worries.