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Wall Street closed sharply lower on Tuesday, dragged down by tech and financial stocks. Recession fears dominated trade as disappointing earnings reports emerged from companies in focus. Economic data suggested that consumer confidence had waned. All three major indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 1% or 344.57 points to close at 33,530.83. Twenty-three components of the 30-stock index ended in negative territory, while seven ended in positive.
The S&P 500 lost 1.6% or 65.41 points to close at 4,071.63. All 11 broad sectors of the benchmark index ended in negative territory. The Materials Select Sector SPDR (XLB), the Technology Select Sector SPDR (XLK) and the Consumer Discretionary Select Sector SPDR (XLY) declined 2.2%, 2.1% and 2%, respectively.
The tech-heavy Nasdaq slid 238.05 points, or 2%, to finish at 11,799.16, marking its biggest single-day percentage drop since Mar 9.
The fear-gauge CBOE Volatility Index (VIX) was up 11.1% at 18.76. A total of 10.8 billion shares were traded on Tuesday, higher than the last 20-session average of 10.3 billion. Decliners outnumbered advancers on the NYSE by a 4.57-to-1 ratio. On the Nasdaq, a 3.50-to-1 ratio favored declining issues.
First Republic and UPS Earnings Report Weighs in on Trade
First Republic Bank has been in the headlines since the regional banking sector crisis hit in March, and has been swaying the market with its upheavals ever since. The bank reported first-quarter 2023 earnings of $1.23 per share, widely surpassing the Zacks Consensus Estimate of $0.72.
However, First Republic also reported $104.5 billion, or a 40% plunge in deposits in the quarter, and its shares tanked to a record low, closing 49.4% down. The bank is rumored to slash headcount by 20% to 25% in the second quarter, thereby trying to contain its expenses. It has also been reported that the bank is trying to sell off $100 billion worth of loans and securities to restructure its balance sheet. On the topic, First Republic said it was "pursuing strategic options" to quickly strengthen the bank without getting into further details.
The fallout was promptly felt in the market as regional banks reeled under its effect. The KBW Regional Banking Index (KRX) fell 4%. Large banks also bore the brunt. There was a broader impact on tech and discretionary stocks also as the economic outlook took a hit, and a recession seems imminent. With the financial sector already facing the heat and a further 25 bps rate hike expected from the Fed in the May meeting, market participants remain concerned that a downturn may not be avoided.
Also casting a pall on the market was United Parcel Service, Inc. (UPS - Free Report) , its shares dropping 10% even after reporting an earnings beat in first-quarter 2023. UPS’ earnings came in at $2.20 per share, which beat the Zacks Consensus Estimate of $2.19. However, revenues of $22,925 million lagged the Zacks Consensus Estimate of $22,935.2 million while decreasing 5.9% year over year. Management went on record saying that the sales volume for the logistics giant is and will remain under pressure.
The Conference Board reported its consumer confidence index fell to 101.3, the lowest since July 2022, from a revised 104.0 in March. This is significantly lower than the consensus of 104.0 for the current period.
Even as other reports continue to indicate that consumers’ view of the current business scenario have improved in recent months, the report suggests that their expectations continue to be below the level which often signals a recession in the short term.
Economic Data
The S&P Dow Jones Indices reported that Case-Shiller Home Prices for Composite 10 cities had risen 0.3% for February 2023. The numbers for January were revised from a decline of 0.5% to an increase of 0.1%. The same for Composite 20 cities rose 0.2%, while the January numbers were revised up to 0.1% from a decline of 0.6%.
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that new home sales in March 2023 were at a seasonally adjusted annual rate of 683,000. The number for February was revised down to 623,000 from the 640,000 reported earlier.
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Stock Market News for Apr 26, 2023
Wall Street closed sharply lower on Tuesday, dragged down by tech and financial stocks. Recession fears dominated trade as disappointing earnings reports emerged from companies in focus. Economic data suggested that consumer confidence had waned. All three major indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 1% or 344.57 points to close at 33,530.83. Twenty-three components of the 30-stock index ended in negative territory, while seven ended in positive.
The S&P 500 lost 1.6% or 65.41 points to close at 4,071.63. All 11 broad sectors of the benchmark index ended in negative territory. The Materials Select Sector SPDR (XLB), the Technology Select Sector SPDR (XLK) and the Consumer Discretionary Select Sector SPDR (XLY) declined 2.2%, 2.1% and 2%, respectively.
The tech-heavy Nasdaq slid 238.05 points, or 2%, to finish at 11,799.16, marking its biggest single-day percentage drop since Mar 9.
The fear-gauge CBOE Volatility Index (VIX) was up 11.1% at 18.76. A total of 10.8 billion shares were traded on Tuesday, higher than the last 20-session average of 10.3 billion. Decliners outnumbered advancers on the NYSE by a 4.57-to-1 ratio. On the Nasdaq, a 3.50-to-1 ratio favored declining issues.
First Republic and UPS Earnings Report Weighs in on Trade
First Republic Bank has been in the headlines since the regional banking sector crisis hit in March, and has been swaying the market with its upheavals ever since. The bank reported first-quarter 2023 earnings of $1.23 per share, widely surpassing the Zacks Consensus Estimate of $0.72.
However, First Republic also reported $104.5 billion, or a 40% plunge in deposits in the quarter, and its shares tanked to a record low, closing 49.4% down. The bank is rumored to slash headcount by 20% to 25% in the second quarter, thereby trying to contain its expenses. It has also been reported that the bank is trying to sell off $100 billion worth of loans and securities to restructure its balance sheet. On the topic, First Republic said it was "pursuing strategic options" to quickly strengthen the bank without getting into further details.
The fallout was promptly felt in the market as regional banks reeled under its effect. The KBW Regional Banking Index (KRX) fell 4%. Large banks also bore the brunt. There was a broader impact on tech and discretionary stocks also as the economic outlook took a hit, and a recession seems imminent. With the financial sector already facing the heat and a further 25 bps rate hike expected from the Fed in the May meeting, market participants remain concerned that a downturn may not be avoided.
Also casting a pall on the market was United Parcel Service, Inc. (UPS - Free Report) , its shares dropping 10% even after reporting an earnings beat in first-quarter 2023. UPS’ earnings came in at $2.20 per share, which beat the Zacks Consensus Estimate of $2.19. However, revenues of $22,925 million lagged the Zacks Consensus Estimate of $22,935.2 million while decreasing 5.9% year over year. Management went on record saying that the sales volume for the logistics giant is and will remain under pressure.
Consequently, shares of PacWest Bancorp and JPMorgan Chase & Co. (JPM - Free Report) lost 8.9% and 2.2%, respectively. JPMorgan Chase carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Consumer Confidence Plunges to a 9-month Low
The Conference Board reported its consumer confidence index fell to 101.3, the lowest since July 2022, from a revised 104.0 in March. This is significantly lower than the consensus of 104.0 for the current period.
Even as other reports continue to indicate that consumers’ view of the current business scenario have improved in recent months, the report suggests that their expectations continue to be below the level which often signals a recession in the short term.
Economic Data
The S&P Dow Jones Indices reported that Case-Shiller Home Prices for Composite 10 cities had risen 0.3% for February 2023. The numbers for January were revised from a decline of 0.5% to an increase of 0.1%. The same for Composite 20 cities rose 0.2%, while the January numbers were revised up to 0.1% from a decline of 0.6%.
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that new home sales in March 2023 were at a seasonally adjusted annual rate of 683,000. The number for February was revised down to 623,000 from the 640,000 reported earlier.