Wall Street closed lower on Friday after a turbulent week, mainly as dark clouds gathered about an ongoing crisis in the banking sector and a possible recession.

Even after the drop, the S&P 500 maintained a weekly gain of 1.4%, and the Nasdaq rose 4.4% weekly. Over the past two weeks, the S&P Bank Index and the KBW Regional Bank Index have lost 4.6% and 5.4%, respectively, their worst two-week losses since March 2020.

All three indices closed in negative territory. The S&P 500 financial sector fell 3.3% to lead losers as cheer over a $30 billion infusion of deposits into First Republic Bank a day earlier faded.

First Republic shares ended 32.8% lower on Friday. These liquidity concerns have spread to Europe, as Credit Suisse shares also stumbled, prompting policymakers to scramble to reassure markets. Among First Republic’s peers, PacWest Bancorp fell 19%, while Western Alliance slid 15.1%.

Following the second and third largest US bank failures, rising concerns regarding the banking industry exist. The two banks faced different issues and challenges, primarily due to the fastest rate hikes in decades.

SVB Financial Group seeks bankruptcy protection amid ongoing drama since the collapse of Silicon Valley Bank and Signature Bank last week. Analysts say this crisis raises recession risk and accelerates the economy’s slowdown.

The Federal Reserve’s two-day monetary policy meeting is scheduled for next week. Amidst the recent discoveries in global crises and indications of an economic slowdown, investors have had a change in expectations regarding the duration and size of the Fed’s interest rate hikes.

At first glance, financial markets are pricing in a 60.5% chance of the central bank raising its key target rate by 25 basis points and a 39.5% chance of keeping rates unchanged, according to the CME’s FedWatch tool.

The Dow Jones Industrial Average fell 384.57 points, or 1.19%, to 31,861.98, the S&P 500 lost 43.64 points, or 1.1%, to 3,916.64, and the Nasdaq Composite lost 86.76 points, or 0.74%, to 11,630.51. All 11 major sectors of the S&P 500 closed in the red. On the bright side, FedEx rose 8% after raising its prediction for the current fiscal year.

Declining issues outnumbered advancing ones on the New York Stock Exchange by a 4.07-to-1 ratio. On Nasdaq, a 2.94-to-1 ratio favoured decliners.

The S&P 500 recorded five new 52-week highs and 20 new lows, while the Nasdaq Composite recorded 29 new highs and 320 new lows. Volume on US exchanges was 19.41 billion shares, compared with the 12.49 billion average for the last 20 sessions.