Global Courant 2023-04-25 22:33:39
Shares fell Tuesday as traders reviewed the latest quarterly earnings from several major companies ahead of reports from major technology names.
The Dow Jones Industrial Average fell 306 points, or 0.9%. The S&P 500 lost 1.3%, while the Nasdaq composite slipped 1.5%.
Shares of First Republic Bank fell nearly 30% after the regional bank released its latest quarterly results. The bank said late Monday that deposits fell 40% to $104.5 billion in the first quarter, but have since stabilized.
First Republic will also reduce costs, including a 20% to 25% headcount reduction in the second quarter. The regional bank was closely followed after investors began to worry it could suffer the same fate as Silicon Valley Bank and Signature Bank, whose closures sparked an industry crisis last month. Shares of First Republic are down more than 90% year-to-date.
Both the SPDR S&P Regional Banking ETF (KRE) and the SPDR S&P Bank ETF (KBE) lost just under 2% as financials weighed on the market. Western Alliance Bancorp and PacWest each fell 4%, while Charles Schwab lost nearly 3% each.
“There is still some trepidation on the streets that there could be hidden dangers from these regional banks,” said Dustin Thackeray, chief investment officer at Crewe Advisors. “You see some caution in that, but mixed with positive earnings. It’s been a good earnings season overall so far.”
UPS fell 9% on quarterly results that fell short of Wall Street expectations and management comments indicating that sales volumes were and should remain under pressure. PepsiCo, on the other hand, rose more than 2% on better-than-expected numbers.
Microsoft and Alphabet will report Tuesday after the bell, the first of several Big Tech names on the earnings chart this week. But those stocks could struggle, according to George Ball, chairman of Sanders Morris Harris, who said large-cap technology may not lead the market for the rest of the year after the early 2023 rally.
Shares of Alphabet fell slightly more than parent company Google’s post-market earnings. According to Bespoke Investment Group, the company has had a cold streak on earnings, missing Wall Street estimates for the past four quarters.
“The tech boom since early 2023 is over,” Ball said. “It’s almost impossible for big tech companies to grow revenue at the robust pace they’ve been accustomed to in recent years.”
Correction: A previous version misrepresented when Amazon reports revenue.
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