Dow drops 300 points, turns negative for the year as bank fears grow: Live updates

Stocks declined Thursday, as contagion fears in the regional bank space were reignited. Investors also digested the Federal Reserve’s 25 basis point rate hike and commentary following its Wednesday meeting.

The Dow Jones Industrial Average fell 335 points, or 1%. The S&P 500 slid 0.6%, and the Nasdaq Composite shed 0.02%.

The Dow turned negative 0.1% year to date on Thursday. Declines in Boeing, Disney, Goldman Sachs and American Express shares pulled back the Dow.

Shares of PacWest tanked by more than 38%, climbing back from earlier losses which exceeded 50%. The decline came after news that the California bank has been assessing strategic options, including a possible sale, a person familiar told CNBC. Regional bank shares sold off hard, with the SPDR S&P Regional Bank ETF (KRE) dropping 4.8%. Western Alliance tumbled 24.2% and saw trading halted multiple times due to volatility. Meanwhile, Zions Bancorporation lost 11%.

There likely won’t be a respite for the embattled regional banking sector until the Fed cuts interest rates, said Jeffrey Gundlach, CEO of DoubleLine. Since the closure of Silicon Valley Bank in March, First Republic has joined the ranks of failed institutions and was recently taken over by JPMorgan Chase.

“Leaving rates this high is going to continue this stress,” Gundlach said on CNBC’s “Closing Bell” Wednesday. “I believe with a very high degree of probability there’s going to be further regional bank failures.”

As the Fed pushed through its 10th rate hike in this cycle and the central bank seemed to soften its language on future increases, Chair Jerome Powell said that it may be too soon to cut.

“We on the committee have a view that inflation is going to come down not so quickly,” he said in his post-meeting press conference. “It will take some time, and in that world, if that forecast is broadly right, it would not be appropriate to cut rates and we won’t cut rates.”