Bank stocks fall amid more failure woe

Other stocks climb on thinking Fed may take pity with its rates

NEW YORK — Bank stocks tumbled Monday on worries about what’s next to break, following the second- and third-largest bank failures in U.S. history. But many other stocks rose on hopes the bloodletting will force the Federal Reserve to take it easier on the hikes to interest rates that are shaking Wall Street and the economy.

The S&P 500 dipped

0.2 percent after whipsaw trading, where it careened from an early loss of 1.4 percent to a midday gain of nearly that much. The Dow Jones Industrial Average fell 90 points, or 0.3 percent, while the Nasdaq composite rose 0.4 percent.

The sharpest drops again came from banks and other financial companies. Investors are worried that a relentless rise in interest rates meant to get inflation under control are approaching a tipping point and may be cracking the banking system.

The U.S. government announced a plan late Sunday meant to shore up confidence in the banking industry following the collapses of Silicon Valley Bank and Signature Bank since Friday.

The most pressure is on the regional banks a couple steps below in size of the massive, “too-big-to-fail” banks that helped take down the economy in 2007 and 2008. Shares of First Republic Bank fell 61.8 percent, even after the bank said

Sunday it had strengthened its finances with cash from the Federal Reserve and Jpmorgan Chase.

Huge banks, which have been repeatedly stress-tested by regulators following the 2008 financial crisis, weren’t down as much. Jpmorgan Chase fell 1.8 percent, and Bank of America dropped 5.8 percent.

The broader market flipped from losses to gains as expectations built that all the furor will mean the Fed won’t reaccelerate its rate hikes, as it had been threatening to do. Such a move could give the economy and banking system more breathing space, but it could also give inflation more oxygen.

Some investors are calling for the Fed to make cuts to interest rates soon to stanch the bleeding. Rate cuts often act like steroids for the stock market.

The wider expectation, though, is that the Fed will likely pause or at least hold off on accelerating its rate hikes at its next meeting later this month.

All told Monday, the

S&P 500 slipped 5.83 points to 3,855.76. The Dow fell 90.50 to 31,819.14, and the Nasdaq rose 49.96 to 11,188.84.