Wall Street's main indexes fell on Friday as investors remained wary about a potential banking crisis even as the country's largest banks came to the rescue of troubled regional lender First Republic Bank.
"Deposits have fled from regional banks like First Republic into the big banks who are now bailing them out by putting the deposits back in. But it doesn't solve the problem," said Thomas Hayes, chairman at Great Hill Capital LLC.
"Until you stop the deposit flight from regional banks into the systemically important banks that are too big to fail, it doesn't matter how much money you pour into the bucket." The news of the rescue came on the heels of a 50-basis-point rate hike by the European Central Bank , which remains laser-focussed on taming inflation despite concerns about the region's banks after troubles emerged at Credit Suisse .
Investors are now looking ahead to the Federal Reserve's interest rate decision, due next week, to gauge how it will tame inflation.
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