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THE GIST (“THE WHAT”)
The S&P Index (SPX) closed the risk-off session down 65.40 points (-1.58%) at 4071.64, breaking out of the tight range it had been trading in over the last week and giving up the strong support level of 4100 as investors digest disappointing earnings from closely watched banks and big tech earnings amid growing fears of economic downturn.
THE DETAILS (The “How & Why”):
First Republic Bank wrapped up the bank earnings, plunging 49% after it reported a massive 40% flight in its deposits, renewing concerns about this lender’s fate in the wake of the recent banking turmoil. Other bank stocks also fell in sympathy as investors look for cues about any systematic risk within the sector, with Charles Schwab Corp, JPMorgan Chase & Co, Bank of America Corp and Wells Fargo & Co, all down more than 2% each.
United Parcel Service Inc. further weighed down on the sentiment of the market, tumbling 10% in its worst day over almost 8 years after missing earnings expectations and indicating that sales volume will continue to remain under pressure.
Tech stocks also traded lower ahead of key earnings releases by Alphabet, especially in the wake of slowing revenue growth over the last four quarters. Microsoft, Alphabet, Amazon and Meta have accounted for roughly 40% of the gains in the S&P index this year and investors will be closely looking for a bullish catalyst as these Big Tech companies slash jobs to control costs to improve margins.
In economic news, Consumer confidence declined more than expected, falling to 101.3 in April from 104 in March, also weighing down on the overall market sentiment.