NEW YORK: Wall Street stocks plummeted on Tuesday (April 25), as shares of First Republic Bank were battered after an earnings report that showed it lost a large amount of deposits – reviving worries over the financial sector.
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.
Investors have been eyeing the performance of regional lenders since the dramatic failures of Silicon Valley Bank and Signature Bank last month, which sparked fears of contagion.
On Monday, First Republic said it lost more than 40% of its deposits in the first quarter this year, and its shares sank nearly 50% as of end-Tuesday.
The gloomy showing came after First Republic reported a drop of nearly US$72 billion in deposits over the first quarter. Excluding a US$30 billion injection from a consortium of 11 US banks, the figure would have topped US$100 billion.
Besides First Republic, Western Alliance Bancorporation dropped 5.6% while PacWest Bancorp slid 8.9%.
“The financial sector is having a bad day,” said Steve Sosnick, chief strategist at Interactive Brokers.
He added that other contributing factors include the disappointing earnings report of logistics giant UPS, whose shares fell around 10%.
“UPS is essential to the US economy ... If their volumes are disappointing that doesn’t bode well,” Sosnick said.
Meanwhile, traders digested the corporate results of tech firms Microsoft Corp and Google parent Alphabet Inc, which reported after the bell.
Microsoft 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 Alphabet 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%.
Also on investors minds was an apparent lawmaker stand-off in Washington over raising the US 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. – AFP, Reuters
Source: The Sun Daily
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