Nasdaq, S&P, Dow set to close in the red as earnings disappoint, banking jitters reignite
U.S. stocks slid on Tuesday and were on track to end lower, as investor reaction to a flood of earnings reports was largely negative. A host of economic data also stoked concerns over the slowing U.S. economy.
Shares of First Republic Bank (FRC) cratered over 40% after the lender saw more-than-expected deposit outflows in the first quarter, reigniting worries that the banking crisis might be far from over. Meanwhile, U.S. consumer confidence slipped to a multi-month low.
Into the final hour of trading, the Nasdaq Composite (COMP.IND) had retreated 1.68% to 11,835.41 points, as technology stocks slipped ahead of results from Google-parent Alphabet (GOOG) (GOOGL) and Microsoft (MSFT) after the closing bell.
A fall in cybersecurity names in the wake of Tenable's (TENB) disappointing billings and guidance put some added pressure on the tech-heavy Nasdaq. NetEase (NTES), Zscaler (ZS) and CrowdStrike (CRWD) were among the top percentage losers on the index.
The benchmark S&P 500 (SP500) was down 1.33% to 4,081.87 points, while the blue-chip Dow (DJI) was lower by 0.83% to 33,595.87 points.
Markets were also dragged down by financial stocks in the wake of a slump in shares of First Republic (FRC). The lender said it saw net deposit outflows of over $70B in the first quarter, rekindling concern about the stability of regional banks. CNBC reported that the White House, the Federal Reserve and the Treasury were considering plans to save the bank.
Overall, 10 of the 11 S&P sectors were trading in the red, led by Energy and Materials. Utilities was the sole gainer.
Among other major earnings news, UPS (UPS) slumped after signaling continued pressure for parcel deliveries ahead. 3M (MMM) reported a fall in profit along with plans for more job cuts. Verizon (VZ) unveiled a mixed set of numbers while adding more than 630K subscribers in the quarter.
Looking at Tuesday's economic calendar, there were several datapoints on the housing market. After falling for seven straight months, the S&P CoreLogic Case-Shiller home price index rose in February. Meanwhile, the FHFA house price index clocked an unexpected rise. Finally, new home sales in March rose more than anticipated.
Additionally, consumer confidence dipped to its lowest since July, while the Richmond Fed's survey of manufacturing activity came in at -10 versus a consensus of +4.
"New home sales jumped 9.6% in March to an annual sales pace of 683k, handily beating expectations," JPMorgan's Michael Feroli said. "This data series is notoriously unreliable, but directionally the increase is consistent with a number of other housing indicators (NAHB, permits, etc.), which suggest that the stabilization in mortgage rates since November is supporting a modest pickup in housing demand from low levels."
"The Conference Board’s April measure of consumer confidence surprised to the downside, slipping from 104.0 last month to 101.3 this month, with the decline entirely attributable to consumers’ expectations. The labor market differential of jobs plentiful less jobs hard to get increased just under a point to 37.3, indicating the labor market is still perceived to be very hot," Feroli added.
Turning to the fixed income markets, the longer-end 10-year yield (US10Y) was down 13 basis points at 3.39%, while the more rate-sensitive 2-year yield (US2Y) was down 20 basis points to 3.94%.
Moreover, dislocation on the shortest-end maturities continued, particularly between the 3-month (US3M) and 1-month (US1M) yields.
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Source: Seeking Alpha
