Cathie Wood’s flagship Ark Innovation ETF (ARKK) reeled in $397 million in new money just Tuesday alone, notching the biggest one-day inflow since April 2021, according to FactSet.

Investors could be piling into the innovation fund under the belief that the current banking chaos could make the Fed pause its rate hike campaign, which would benefit growth stocks. Wood’s disruptive tech darlings were among the hardest hit by rising rates over the past year.

— Yun Li

— Samantha Subin, Gina Francolla

The S&P 500 briefly dipped below its flatline for the year.

Wednesday’s slide brought the index within a percentage point of its flatline for most of the session, giving up most ground after an early 2023 rally pushed it up. The broad index at one point traded down so much that it was in the red for the year.

Utility stocks in the S&P 500 have side-stepped the broader market’s fall in Wednesday’s session.

The sector is up 1%, despite the broad index falling nearly 1.75% at the same time.

Axel Energy is leading the way for the sector, up 2.8%. Other top performers include American Electric Power, WEC Energy and Southern Company, which have all gained more than 2%.

Communication services was the only other of the 11 sectors to advance in Wednesday’s session, as advances of more than 1% in Alphabet, T-Mobile and Netflix helped push the sector up a relatively modest 0.2%.

On the other hand, energy and materials were the two worst performing sectors, dropping 6.2% and 4.4%, respectively.

— Alex Harring

Some technology and software stocks outperformed Wednesday as troubles at Credit Suisse spooked investors and the broader market.

The bright spots included Microsoft and Netflix, up 0.6% and 1.8%, respectively. Alphabet shares were modestly higher.

SentinelOne shares surged nearly 9% after posting a smaller-than-expected loss for the latest quarter. Akamai Technologies and Jack Henry & Associates also moved slightly higher.

Rate-sensitive technology stocks have benefitted recently from the downtick in yields. Higher rates typical means valuations are less attractive for tech stocks, by making future profits less valuable.

— Samantha Subin

High yield corporate bond spreads to Treasurys are at the widest they’ve been this year, but still well below last year’s highs.

Peter Boockvar of Bleakley Financial Group said the Bloomberg Corporate High Yield Bond Index was yielding 8.87% Tuesday, compared to a high of 9.88% last October.  Yields move opposite price.

Investors watch high-yield debt among other things for signs of credit stress in times of concern.

“We’re around the widest since Jan. 3, so it’s given back all the spread narrowing we’ve seen this year,” he said.

The spread of the high yield index to Treasurys was about 470 basis points Tuesday. Boockvar said it began the year at about 470 basis points, but dipped to about 385 in February. A basis point equals 0.01 of a percentage point.

“We’re still 100 basis points narrower than last July,” he said. “Treasury yields collapsed so also part of this is the drop in Treasurys.”

Boockvar noted that the prices of both iShares iBoxx $ High Yield ETF, HYG and the Invesco Senior Loan ETF, BKLN were near the lows of 2023, but still above last year’s lows.

At the same time, investors are pouring into the safety of Treasurys. The 2-year yield fell to 3.81%. It was at about 4.24% late Tuesday.

The Federal Reserve failed to slow down its aggressive rate hikes in time, and now as a series of bank crises mount, the central bank’s credibility is on the line, said economist Mohamed El-Erian. 

His comments come as the U.S.-traded shares of Credit Suisse sank to an all-time low in trading Wednesday. The massive sell-off comes after the Swiss bank, already embattled by a series of regulatory scandals, said its largest investor, Saudi National Bank, could not provide it with any further financial assistance. This news renewed the rout in U.S. bank stocks that began last week with troubles at Silicon Valley Bank and Signature Bank.

As the Federal Reserve continues to digest new economic data indicating where it stands on the fight against inflation, El-Erian sees the institution’s credibility at stake after it “didn’t slow down in time [and] slammed on the brakes.” 

CNBC Pro subscribers can read more about his insights here.

— Hakyung Kim

The gains for these two ETFs coincide with a broad selloff for stocks amid global worries about the banking sector. Treasury yields have also fallen as investors snap up these U.S. government bonds.

Both BND and AGG offer broad exposure to U.S. investment grade bonds. They also have hefty allocations toward U.S. Treasurys and issues from the Federal National Mortgage Association and the Government National Mortgage Association – known as Fannie Mae and Ginnie Mae.

— Darla Mercado, Gina Francolla

Credit Suisse Group bonds sold off sharply, as the price of insuring those bonds also raced higher.

Credit Suisse 5-year credit default swaps reached a record high 694.83 Wednesday, according to Refinitiv. UBS’ 5-year CDS was at about 88 Tuesday, while JP Morgan Chase 5-year CDS was at about 83.

By comparison, Credit Suisse reached a high of about 255 during the financial crisis in March, 2009, according to Refinitiv.

Credit Suisse’s 10-year corporate bond was yielding more than 9% Wednesday. The bank’s stock was also down about 17%.

A credit default swap allows investors to protect their holdings in a company or sovereign’s bonds, against the chances of a default. 

–Patti Domm

The Euro is down 1.84% against the dollar, falling to $1.0535 as of 11:05 a.m. ET. It is currently on track for its worst day since Mar. 19, 2020 when it fell 2.043% against the dollar.

The dollar index is up 1.28%, on pace for its best day since Mar. 7, when the index gained 1.21%. It is up 0.2% week-to-date and its sixth positive week in seven weeks.

The Dow briefly notched a new session low as investors entered the second hour of trading.

The 30-stock index was down just over 610 points, or 1.9%, shortly after 10:45 a.m. ET. The Dow previously hitting a session low of 602 points down.

The S&P 500 and Nasdaq Composite, meanwhile, also continued trading in the red. The S&P 500 slide brought the broad index within 0.3% of its flatline for the year.

U.S. West Texas Intermediate crude hit its lowest level in more than a year as troubles at Credit Suisse spooked markets.

WTI hit a low of 67.93, its the lowest level since Dec. 20, 2021, when it traded as low as 66.04.

Oil rose earlier in the session after data showed economic activity improve in China in the first two months of the year.

— Samantha Subin, Gina Francolla

Treasury yields fell at a stunning pace, as futures showed sharply reduced expectations the Federal Reserve would raise interest rates next week.

“Liquidity has been poor the last couple of days, but volumes have been high, which tells me a lot of people are doing trades they feel compelled to do, rather than ones they want to do,” said Michael Schumacher, director rates strategy at Wells Fargo.

The 2-year yield Treasury yield, which most reflects Fed policy, was at 3.78%. It was at 4.24% in late U.S. trading Tuesday, before new worries about the banking system emerged. Credit Suisse shares tanked after reports that Saudi National Bank could provide no further financial support. Stocks fell sharply as that reignited concerns across the banking sector.

“It’s extraordinary,” Schumacher said of the 2-year yield. “It’s gapping. It can go almost anywhere. If you try to take a view right now, the vol [volatility] is just so high, you can’t do it.” The 10-year was at 3.39%.

He said fed funds futures briefly priced in as little as 9 basis points of a Fed rate hike for the central bank’s meeting next week but futures were volatile and were pricing in about 12 basis points just after 9:30 a.m. ET. On Tuesday, the market pricing suggested investors mostly expected a quarter point hike, or 25 basis points.

“The ECB, which meets tomorrow is still priced for 32 basis points, which seems whacky,” Schumacher said, referring to pricing in overnight index swaps.

The European Central Bank has been expected to raise rates by a half percent, but after worries swirled around Credit Suisse many traders expect a smaller hike of 25 basis points. A basis point equals 0.01 of a percentage point.

–-Patti Domm

Credit Suisse shares fell more than 23% in heavy volume as the market opened. Shares sank to a fresh all-time low of $1.75.

Troubles at the Swiss bank have reignited the turmoil among financial stocks, with pressure especially acute for mid-size U.S. banks. The bank’s largest investor, Saudi National Bank, said it can’t provide the company with further financial assistance.

—Christina Cheddar Berk

Shares of First Republic slid 15% on Wednesday as news that Credit Suisse’s biggest backer wouldn’t provide anymore financial support rattled the broader market.

First Republic and other regional bank stocks have been volatile in recent days as investors grapple with the fallout from the failure of Silicon Valley Bank.

Other regional bank stocks also fell Wednesday, including Western Alliance, last down about 4%.

— Samantha Subin

The three major indexes all traded lower as investors entered the new trading session.

The Dow was down 1.2%, while the Nasdaq Composite dipped 0.9% about 15 minutes after the market opened. The S&P 500 was down 1.2%, a drop that pulled the index’s year-to-date gain within one percentage point of its flatline.

— Alex Harring

First Republic Bank turned negative in the premarket despite trading up earlier, joining regional banks in the red.

The stock has been closely followed after feeling whiplash in recent sessions as investors focused on banks following the closure of Silicon Valley Bank and Signature bank. Shares popped nearly 27% in Tuesday’s relief session after closing down nearly 62% on Monday.

Shares of First Republic were last down 5.3% in the premarket, meaning it was performing worse than the SPDR S&P Regional Banking ETF (KRE), which was down 4.7%

BlackRock CEO Larry Fink issued a somber warning on the state of the financial markets, saying the banking crisis brought on by the collapse of Silicon Valley Bank could spread, but it was too early to determine.

“We don’t know yet whether the consequences of easy money and regulatory changes will cascade throughout the U.S. regional banking sector (akin to the S&L Crisis) with more seizures and shutdowns coming,” Fink said in his annual chairman letter to investors.

Fink, 70, said it now seems “inevitable” that some banks will need to pull back on lending to shore up their balance sheets, and there might be stricter capital standards for banks going forward.

— Yun Li