Fears of financial instability sent stocks around the world plummeting on Wednesday.

The Dow Jones Industrial Average fell by as much as 500 points, or 1.7 percent, in early trading. The Nasdaq Composite fell 1.2 percent. The S&P 500 dropped by 1.6 percent. The small-cap Rusell 2000 lost 2.3 percent.

U.S. banks and consumer finance companies were under renewed pressure as worries about Swiss banking giant Credit Suisse reignited fears of financial instability. The KBW Bank Index, which tracks large U.S. banks, fell 3.1 percent.

The Associated Press reported before the U.S. market opened:

Large and mid-size banks in Europe and the U.S. sank sharply before U.S markets opened, particularly in Europe. Major European banks fell between 5 percent and 10 percent, though Switzerland’s Credit Suisse skidded nearly 25 percent to all-time lows. That decline comes after media reports that Saudi National Bank representatives said they could not shore up their investments in Credit Suisse, citing regulatory concerns.

Confidence in the banking system has eroded in just a matter of days following the failures of Silicon Valley Bank on Friday and Signature Bank on Sunday.

Most of the premarket decliners in the S&P 500 early Wednesday were regional banks, with Zion Bancorporation, KeyCorp, Commerce and Regions all sliding between 5 percent and 8 percent. Bigger banks also lost ground, with Wells Fargo, Bank of America and Citigroup all fell between 3 percent and 4 percent.

Banks have struggled for the better part of the year as higher interest rates has fewer people and businesses taking out loans, part of the Federal Reserve’s goal as it tries to cool the economy and bring down four-decade high inflation.

Investors returned to the bond market Wednesday, sending yields lower again after they recovered somewhat the previous day. The 2-year yield fell back down to 4.05 percent from 4.25 percent late Tuesday, and the yield on the 10-year slid to 3.53 percent from 3.69 percent.

Stocks rallied Tuesday after the government said consumer prices decelerated from the previous month, mostly in line with analysts’ expectations. The data showed core inflation, with volatile energy and food prices stripped out to show a clearer trend, was 0.5 percent in February over the previous month, edging up from January’s 0.4 percent gain. The Fed pays close attention to core inflation in deciding on monetary policy.

Investors fear the Fed might respond to enduring upward pressure on prices by speeding up the pace of interest rate increases to dampen economic activity and inflation.

The Fed faces a dilemma over how to respond when banks already are under strain after the fastest pace of rate hikes in a decade knocked down prices of their assets.

President Joe Biden and regulators have tried to assure the public that risks are contained and deposits in other banks are safe.

Later Wednesday, the government reports on retail sales, giving the Fed more data to chew on before its meeting next week where the central bank will decide whether or not to raise its main borrowing rate for the ninth time in a row.

In European trading, London’s FTSE 100 tumbled 2.4 percent at midday, the DAX in Frankfurt retreated 2.8 percent and the CAC 40 in Paris skidded 3.4 percent.

In Asia, the Shanghai Composite Index rose 0.6 percent to 3,253.31 after Chinese economic activity improved in January and February but less than expected following the end of anti-virus controls.

The Nikkei 225 in Tokyo advanced less than 0.1 percent to 27,229.48 after major Japanese companies announced they had agreed with unions to the biggest wage increases in almost two decades. Low wages are seen as a major drag on economic growth in Japan, but fewer than one in five workers belongs to a union.

The Hang Seng in Hong Kong jumped 1.5 percent to 19,539.87. The Kospi in Seoul surged 1.3 percent to 2,379.72.

India’s Sensex shed 0.2 percent to 57,783.79. New Zealand and Southeast Asian markets advanced.

In energy markets, benchmark U.S. crude slid $1.039 to $70.24 per barrel in electronic trading on the New York Mercantile Exchange. The contract plunged $3.47 on Tuesday to $71.33. Brent crude, the price basis for international oil trading, lost $1.19 to $76.26 per barrel in London. It lost $3.32 the previous day to $77.45.

The dollar was down to 133.52 yen from Tuesday’s 134.19 yen. The euro declined to $1.0594 from $1.0741.

On Tuesday, the S&P 500 rose 1.7 percent and the Dow gained 1.1 percent. The Nasdaq composite added 2.1 percent.

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McDonald reported from Beijing; Ott reported from Silver Spring, Md.