NEW YORK (`) – Wall Street tumbled Tuesday after a spate of companies released mixed earnings reports for the first three months of the year.
The S&P 500 was down 0.4% in early trade. The Dow Jones Industrial Average fell 23 points, or 0.1%, to 33,851 at 9:45 a.m. Eastern time, while the Nasdaq Composite was 0.5% lower.
First Republic Bank plunged nearly 30% for the biggest loss in the S&P 500 after customers withdrew more than $100 billion in deposits in the first quarter. That doesn’t include $30 billion that big banks invested to build confidence in their rivals after the second- and third-largest US bank failures in history shook confidence.
The magnitude of the drop in deposits overshadowed First Republic’s earnings expectations earlier in the year, which beat analysts.
The majority of companies have beaten expectations so far this earnings season, but the bar has been set significantly low. Analysts are forecasting the worst fall in S&P 500 earnings since spring 2020, when the pandemic froze the global economy.
UPS fell 8.6% after meeting earnings forecasts but said it was generating less than expected revenue. It also said its full-year results are likely to be on the lower end of its previous guidance, citing a challenging economy and other factors.
GE Healthcare Technologies fell 9.7% and Danaher fell 5.3%, although both reported better-than-expected earnings and sales.
On the gainer side, PepsiCo rose 1.6% after beating earnings expectations. Homebuilder PulteGroup rose 2.8% after it also beat forecasts.
The heart of earnings report season is approaching, with more heavyweights coming after the close for the day.
Microsoft and Google’s parent company Alphabet are both on the agenda. Because they’re two of the largest companies on Wall Street by market value, their stock movements carry additional weight on the S&P 500 and other market indices.
Corporate earnings expectations are broadly low as inflation remains high, interest rates are much higher than a year ago and large parts of the non-jobs economy are either slowing or contracting.
On Thursday, the US will give its first estimate of how much the economy has grown over the first three months of the year. Economists expect growth to slow to an annual rate of 1.9% from 2.6% at the end of 2022.
Much of the slowdown is due to all the rate hikes that the Federal Reserve has done over the past year. It’s trying to bring down high inflation, but its main tool in doing so is a notoriously blunt one that works by slowing down the entire economy and hurting investment prices.
The Federal Reserve meets next week, and much of Wall Street expects it to hike rates at least once more before pausing.
In the bond market, the yield on the 10-year Treasury fell to 3.41% from 3.50% late Monday. It helps set interest rates on mortgages and other major loans.
The two-year yield, which tends to impact expectations for Fed action, fell to 4.02% from 4.11%.
In overseas markets, equity markets in Europe and Asia were mixed.
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` business writers Joe McDonald and Matt Ott contributed.
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