Bank stocks on Wall Street plummeted on Monday as part of the sweeping reverberations of the crash of Silicon Valley Bank (SVB), the second-largest bank failure in U.S. history.

As a push to curb the impact of the collapse failed to allay worries, the development sparked a market panic causing investors to seek new havens for their investments.

The S&P 500, the best single gauge of big-cap U.S equities, declined 0.3 per cent in morning trading, later dropping by 1.4 per cent after steep falls in bank stocks, especially regional banks. This prompted a halt in trading.

On Sunday, US regulators waded in the aftermath of the collapse of SVB as well as that of Signature Bank.

Regional banks encountered the biggest strain, with First Republic Bank shedding 66.3 per cent despite the lender’s Sunday reassurance that it has shored up its finances with funding from the Federal Reserve and JP Morgan Chase.

Big lenders Morgan Stanley, JP Morgan Chase and Bank of America all fell.

“So far, it seems that the potential problem banks are few, and importantly do not extend to the so-called systemically important banks,” said analysts at ING.

Hopes strengthened that the Fed will likely halt monetary policy tightening in the light of the bank collapses even as it warms up for a policy meeting next week.

As of 10 a.m. Eastern Time, the Dow Jones Industrial Average had advanced by 94 points or 0.3 per cent at 32,004. The tech-heavy Nasdaq composite had climbed 0.1 per cent as of then, both indexes wiping out earlier losses.

Performance in equity markets in Asia was a mixed bag, seeing a shockwave following a declaration by the U.S. to protect depositors at banks. Yet the losses magnified in some parts of Europe, for instance in Germany where the DAX shed 3.3 per cent following a plunge in bank stocks across the continent.

A group of investors want the Fed to swiftly arrange to prune interest rates in order to arrest the situation.

Kevin Cummins, the chief U.S. economist at NatWest, said “At this point in time, depending on reactions in financial markets and eventual fallout on the overall economy, we wouldn’t rule out that the hiking cycle could even be over and that the next move by Fed officials may be lower, not higher.”

Increasing rates could decelerate inflation by slowing the economy even though it strengthens the likelihood of a recession later on.

The Fed started upping rates roughly a year ago, which has hampered the investment portfolio of banks.

The government in London organised the sale of SVB’s UK subsidiary, Silicon Valley Bank UK Limited, for the nominal sum of one British pound, with HSBC acquiring it in a rescue deal.

Even though the lender is small, holding below 0.2 per cent of bank deposits, it had been central to funding tech and biotech startups, which the British government is relying on to stoke economic growth.