Day Traders Diary

4/25/23

The major averages tumbled today following more earnings including regional bank, First Republic Bank that continues to struggle.  The Dow Jones Industrial Average fell 344 points, or 1.02%, to end at 33,530. The S&P 500 finished down 65 points or 1.58% while the Nasdaq Composite dropped 238 points or 1.98% to close at 11,799.

Shares of First Republic Bank tumbled more than 49% after the regional bank posted its latest quarterly results, saying late Monday that deposits dropped 40% to $104.5 billion in the first quarter but have since stabilized. First Republic will also be trimming expenses, including slashing headcount by 20% to 25% in the second quarter. Bloomberg News reported Tuesday that the bank was trying to sell as much as $100 billion of loans and securities to restructure its balance sheet.

The regional bank has been closely watched after investors grew concerned it could face the same fate as Silicon Valley Bank and Signature Bank, whose closures set off an industry crisis last month. First Republic shares have collapsed more than 93% so far this year.

Both the SPDR S&P Regional Banking ETF (KRE) and SPDR S&P Bank ETF (KBE) lost more than 4% and 3%, respectively, as financials weighed on the market. Western Alliance Bancorp slid 5.6%, and PacWest dropped 8.9%. Charles Schwab shed almost 4%. The market fell in sympathy as First Republic shares notched new lows in afternoon trading.

Traders also fretted over a disappointing earnings report from UPS, which dropped about 10% after the company missed expectations and management said sales volumes were — and should continue to be under pressure. PepsiCo, on the other hand, rose 2.3% on better-than-expected numbers.

Microsoft and Alphabet are slated to report Tuesday after the bell, the first of multiple Big Tech names on the earnings schedule this week. But those stocks could struggle, according to Jay Hatfield of Infrastructure Capital Management, after rallying earlier this year

Alphabet shares fell 2% ahead of the Google-parent's earnings after the market closes. The company has been on an earnings cold streak, missing Wall Street estimates the last four quarters, according to Bespoke Investment Group.