Wall Street sinks as bank fears flare

NEW YORK — Stocks sank on Wall Street Thursday as worries cranked higher about a cracking U.S. banking system.

The S&P 500 fell 0.7% to add to its loss for the week so far. The Dow Jones Industrial Average dropped 286 points, or 0.9%, and is now down for the year, while the Nasdaq composite fell 0.5%.

The wildest action was in the financial industry, where shares of PacWest Bancorp tumbled 50.6%. It’s been under heavy scrutiny by investors recently following three of the four largest U.S. bank failures in history.

“The important thing to remember is banking is as much about confidence as it is about economics and accounting,” said George Bory, chief investment strategist for fixed income at Allspring Global Investments. “We’re in a period where confidence is very fragile, arguably damaged. Policy makers are trying to reestablish confidence in the system, and you can just see what’s happening in share prices: The confidence hasn’t been restored yet.”

Shares of Western Alliance Bancorp plunged as much as 61% after a report from The Financial Times said the Phoenix-based bank was considering selling its business, among other options. The company refuted the report and its stock pared its drop to a loss of 38.5%.

First Horizon dropped 33.2% after it and TD Bank Group agreed to call off their merger deal. TD told First Horizon it did not know when it could get regulatory approvals for the deal.

Regulators seized First Republic Bank on Monday and sold most of it to JPMorgan Chase, with hopes that could bolster confidence in the industry. Officials stressed the banking system is sound and secure.

The worry now is that even if no more banks topple, the industry’s turmoil could cause smaller and mid-sized banks to pull back on lending, which would further smother the economy.

A report on Thursday showed the number of U.S. workers filing for unemployment benefits last week accelerated more than expected. A report on the overall job market will be released Friday.

Companies in the S&P 500 are on track to report a second straight quarter of profit drops, but earnings reporting season results have mostly been better than expected.

Ball gained 13.4% after the maker of aluminum cans and other packaging reported stronger profit than expected.

Kenvue, the consumer health business spun off by Johnson & Johnson, soared 22.3% in its first trading following its initial public offering. Its brands include Band-Aids, Listerine and Tylenol.

All told, the S&P 500 fell 29.53 points to 4,061.22. The Dow dropped 286.50 to 33,127.74, and the Nasdaq fell 58.93 to 11,966.40.