Markets drop following Fed stress test of banks

Markets opened down Friday morning after the Federal Reserve said many banks would face difficulties in the event of a prolonged or deepening coronavirus crisis.

The Dow Jones Industrial Average dropped 150 points, or 0.6 percent, and the S&P 500 fell 13 points, or 0.4 percent.

On Thursday, the Fed said it would restrict banks from stock buybacks and limit dividends to investors based on the results of its latest bank stress test.

ADVERTISEMENT

The test found that the 33 banks it looked at would remain solvent in a deeper crisis, but that some would find their reserves at dangerously low levels.

Markets had a tumultuous week, with the Dow Jones dropping more than 700 points Wednesday and then rising more than 300 points Thursday.

The tumult in the markets comes as COVID-19 cases are on the rise in over half of all states, and the U.S. posted its highest daily increases in new infections.