Wall Street tumbled on Tuesday in a broad sell-off led by financial stocks after Moody’s downgraded several U.S. banks, though drugmakers rose on Eli Lilly’s strong results and positive data from Novo Nordisk’s obesity treatment.

The agency cut ratings on 10 small- to mid-sized lenders by one notch and placed six banking giants, including Bank of New York Mellon, U.S. Bancorp, State Street and Truist Financial, on review for potential downgrades.

Moody’s also warned that the sector’s credit strength would likely be tested by funding risks and weaker profitability.

Big banks Goldman Sachs and Bank of America eased 2.9% and 3.2%, respectively, while Bank of New York Mellon and U.S. Bancorp shed 2.4% and 2.5%.

The S&P 500 Banks index slid 2.6%, while the KBW Regional Banking index dropped 3.1%.

“Anytime you see the backbone of the U.S. financial system being under watch, that gives people a lot to pause,” said Brandon Pizzurro, director of public investments at Guidestone Capital Management.

“Markets are slowly digesting that, maybe the U.S. financial system is not absolutely perfect and maybe we are going to have higher rates for a much longer period of time.”

The CBOE Market Volatility index, Wall Street’s fear gauge, hit a two-month high at 17.71.

Lenders have lost 4% so far this year, compared with a 16.4% rise in the benchmark S&P 500 index, after the collapse of Silicon Valley Bank and Signature Bank earlier this year sparked a crisis of confidence in U.S. lenders.

After the S&P 500 and Nasdaq logged their worst week since March, Wall Street had rallied on Monday as investors built positions ahead of Thursday’s highly awaited U.S. inflation report.

Calming some jitters over further monetary tightening, Philadelphia Fed President Patrick Harker said barring any abrupt change in the direction of recent economic data, the U.S. Federal Reserve could be at a stage where it could leave interest rates unchanged.

At 11:35 a.m. ET, the Dow Jones Industrial Average was down 347.27 points, or 0.98%, at 35,125.86, the S&P 500 was down 46.63 points, or 1.03%, at 4,471.81, and the Nasdaq Composite was down 197.63 points, or 1.41%, at 13,796.77.

Ten of the 11 major S&P 500 sectors declined, led by losses in energy firms, as crude prices fell after disappointing trade data from top-consumer China.

Drugmakers globally rose after Denmark-based Novo Nordisk said that its obesity drug, Wegovy, reduced the risk of heart disease.

Eli Lilly surged 17.2% to hit a record high after the pharmaceutical firm posted upbeat quarterly profits.

Dish Network jumped 10.3% as the pay-TV provider disclosed plans to merge with satellite communications vendor EchoStar.

United Parcel Service lost 0.7% after the U.S. economy bellwether cut its annual revenue forecast.

Declining issues outnumbered advancers by a 3.76-to-1 ratio on the NYSE and a 2.28-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and 16 new lows, while the Nasdaq recorded 19 new highs and 148 new lows.

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