Equity markets gave up Tuesday's gains on Wednesday as the banking crisis spreads. The latest news is that Credit Suisse needs capitalization, and its largest shareholder is barred from providing capital for regulatory reasons. The news sparked a 2.0% decline in the S&P 500, although the index closed off the day's lows. The takeaway for investors is the S&P 500 index is fighting to keep its head above water and may succumb to another sell-off within days.

The next shoe to drop will be Wednesday, when the FOMC issues its policy statement. The market has priced in a 25 basis point hike due to the growing bank crisis, but investors should not be shocked if the Fed hikes by 50 basis points. A 50 basis point hike is consistent with recent commentary and the inflation trajectory.