Wall Street sinks as weak earnings fan fears of economic slowdown
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[April 26, 2023] By
Sinéad Carew, Sruthi Shankar and Ankika Biswas
(Reuters) - Wall Street's major averages suffered their deepest declines
so far this month as a downbeat UPS forecast exacerbated investor
concerns about a slowing U.S. economy on Tuesday while plunging deposits
at regional First Republic Bank added to jitters about the bank sector's
health.
Shares in United Parcel Service Inc fell 10%, its biggest daily loss
since July 2006, after the courier company forecast full-year revenue at
the lower end of its prior target.
This helped push the Dow Jones Transport Average index down 3.6%, for
its biggest one-day drop since September.
Also worrying was Tuesday's data showing U.S. consumer confidence fell
to a nine-month low in April.
"Investors have been trying valiantly to hold it together in the midst
of a big earnings and economic data week and a big Federal Reserve week
next week," said Carol Schleif, chief investment officer for BMO Family
Office based in Chicago.
Traders largely expect the central bank to hike rates by 25 basis points
on Wednesday after its Federal Open Market Committee meeting.
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Microsoft Corp shares rebounded after closing down 2.2% in the regular
session and was the biggest drag on the S&P 500 ahead of its quarterly
report. It reversed course to rise 4.6% in late trading after its
revenue beat analysts' expectations.
Similarly, shares in Google's parent Alphabet Inc rose 4% after the bell
when its first-quarter revenue surpassed expectations on an advertising
uptick and steady cloud services demand. It had closed down 2%.
The Dow Jones Industrial Average fell 344.57 points, or 1.02%, to
33,530.83; and the S&P 500 lost 65.41 points, or 1.58%, at 4,071.63,
with both marking their biggest one-day percentage losses since March
22.
The Nasdaq Composite dropped 238.05 points, or 1.98%, to 11,799.16 in
its biggest one-day percentage decline since March 9.
The KBW Regional Banking index dropped 3.9% as First Republic shares
fell 49%, hitting a record low.
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Traders work on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., April 14, 2023.
REUTERS/Brendan McDermid
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The beleaguered lender reported a more than $100 billion flight in
deposits in the first quarter following the biggest banking crisis
since 2008 last month.
"People are trying to figure out the health of the regional banks in
general. Is there a canary in the coal mine? It's really important
for mid-size businesses in the country that the regional banks stay
healthy," said BMO's Schleif.
Also on investors minds was an apparent lawmaker stand-off in
Washington over raising the U.S. debt ceiling.
"Anytime you hear about a potential default that would trigger a
risk-off environment. If we go to the brink and even beyond that
wouldn't bode well for risk assets or consumer confidence," said
Brian Price, head of investment management for Commonwealth
Financial Network in Boston.
Shares in medical technology firm Danaher Corp fell 8.8% after it
cut its annual sales growth forecast.
General Motors Co shares fell 4% after it cautioned that 2022 price
gains will not last as the year goes on, even as it lifted full-year
profit and cash flow forecasts.
PepsiCo Inc shares rose 2.2% after it raised its annual revenue and
profit forecasts.
Declining issues outnumbered advancers on the NYSE by a 4.57-to-1
ratio; on Nasdaq, a 3.50-to-1 ratio favored decliners.
The S&P 500 posted 22 new 52-week highs and seven new lows; the
Nasdaq Composite recorded 35 new highs and 378 new lows.
On U.S. exchanges 10.78 billion shares traded compared with the
10.32 billion average for the last 20 sessions.
(Reporting by Sinéad Carew in New York, Sruthi Shankar and Ankika
Biswas in Bengaluru; Editing by Vinay Dwivedi and Richard Chang)
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