The Dow Jones index lost 1.02% on Tuesday, to 33,530.83 points. The S&P500 fell by 1.58%, stopping at 4,071.63 points. The Nasdaq index fell by 1.98%, closing at 11,799.16 points.
Investors already knew it was going to be a tough session Monday night, when First Republic Bank’s quarterly report hit the market. A California-based bank admitted that more than $100 billion in deposits “ran away” in three weeks in March. Shares of First Republic Bank fell nearly 50 percent on Tuesday. Since the beginning of the year, its market value has fallen by 93%.
Such reports made investors realize that the banking crisis in the United States may still be far from over and that the problems of medium and small lenders could hurt the economy and financial markets. Major bank stocks also fell. Bank of America fell 3.1%, JP Morgan Chase fell more than 2%, and Wells Fargo fell 2.2%. All of the above banks were (and still are) involved in providing emergency assistance to the First Republic Bank, in which the largest US banks invested a total of 30 billion US dollars.
But perhaps more disturbing is the news from United Parcel Service. Shares of this courier company were discounted by nearly 10% and had the strongest daily drop in 8 years. UPS management provided a pessimistic forecast for revenue for the full year and acknowledged that the economy was beginning to slow.
This was evident in the macroeconomic data published today. In April, US consumer sentiment deteriorated unexpectedly. The Conference Board index fell by 104 points. Reaching 101.3 points as the regional economic climate index of Richemont fell more than expected by analysts: from -5 points. In March to -10 points. In April (-8 points expected). As a consolation, we received surprisingly strong data from the real estate market: in March, sales of new homes unexpectedly increased, and in February a dramatic increase in prices was recorded (by 0.4% on a monthly basis).
First quarter reporting season is underway on Wall Street. It’s true that companies generally surprise positively, but that still means that corporate earnings attributable to the S&P500 will be about 4% lower than a year ago. At the beginning of April, analysts estimated it would drop by 5-6% year-on-year.
Within a week, the FOMC meets, and most economists believe it will raise the federal funds rate by another 25 basis points, bringing it back to its 2007 peak. On this cycle. But even the market is sometimes wrong and has underestimated the Fed’s determination to fight inflation several times in recent quarters.
Among the largest companies, Amazon shares stood out in the negative, down 3.2%. Microsoft and Alphabet lost nearly 2% each. Both companies will announce their results after the end of Tuesday’s session.
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