4:08pm: Regional banks drop again
The Dow closed Tuesday down 367 points, 1.1%, at 33,684, the Nasdaq Composite lost 132 points, 1.1%, to 12,081 and the S&P 500 shed 48 points, 1.2%, to 4,120. The small-cap Russell 2000 index declined 37 points, 2.1%, to 1,732.
Investors are nervously awaiting news from the Federal Reserve's two-day meeting, which began today.
“You have the perfect cocktail for a risk-off day,” said Art Hogan, chief market strategist at B. Riley Wealth Management. “It’s a typical risk-off day with three binary situations staring at us from the short-term horizon.”
Among those hit were regional banks. Investors didn't seem reassured by JPMorgan CEO Jamie Dimon's declaration Monday that the US banking crisis is “over” on Monday following the bank’s takeover of First Republic. Regionals PacWest Bancorp and Western Alliance Bancorporation shares fell 27% and 15%, respectively.
12.05pm: Dow falls more than 500 points as banking worries persist
US stocks were sharply lower in noon trading as investors continue to worry about the banking sector ahead of the Federal Reserve’s interest rate decision.
At midday, the Dow lost 544 points to 33,508, while the S&P 500 eased 69 points at 4,099 and the tech-heavy Nasdaq slipped 189 points to 12,024.
“We think that the concerns around the bank sector, combined with uneasiness regarding the debt ceiling — and most importantly, apprehension over the uncertain future Fed rate policy stance — are all contributing to this risk off sentiment,” AXS Investments CEO Greg Bassuk said.
Notable movers included shares of Uber Technologies, Inc, which climbed more than 9% after the ride-sharing company topped revenue and earnings expectations for its first quarter of 2023.
9:40am: Debt fears dampen sentiment
US stocks opened modestly lower with traders proceeding cautiously as the Federal Reserve’s May rate-setting meeting kicks off. Dragging on sentiment was also US Treasury Secretary Janet Yellen’s warning that the country could run out of cash as soon as June 1st.
“It’s hard to overstate the negative impact that a default could have on the economy. Yellen’s comments have focused the market’s attention,” commented FOREX.com market analyst Fiona Cincotta.
Just after the opening bell, the Dow Jones was down 158 points or 0.5% at 33,894 points, the S&P 500 had slipped 15 points or 0.4% at 4,153 points, and the Nasdaq was down 17 points or 0.1% at 12,198 points.
Uber shares had added 6.4% at US$34.85 after reporting a first quarter earnings beat driven by a surge in bookings.
7:05am: Eyes on Fed meeting
US stock indexes are expected to edge lower at the open on Tuesday as investors position themselves for the Federal Reserve’s May policy meeting to kick off, with an interest rate decision due on Wednesday.
The US central bank's two-day policy meeting is expected to conclude with the central bank announcing another 25 basis-point rate hike after recent mixed economic data, with investors, more importantly, looking for clues on whether the Fed will keep rates steady after this meeting, or if it will further tighten monetary policy to fight inflation.
TickMill Group’s Market Analyst James Harte commented: "With recession risks growing and given recent developments in the banking sector, the Fed is expected to strike a more reserved tone on rates going forward. If seen, this should help keep stocks supported near-term."
In pre-market trading on Tuesday, futures for the Dow Jones Industrial Average (DJIA) were around 0.2% lower, while those for the S&P 500 were also down 0.2%, while Nasdaq-100 futures were off 0.02%.
The moves follow modest declines on Monday, when the DJIA and Nasdaq Composite both lost about 0.1%, while the S&P 500 finished just slightly below its opening level.
Investors remain focused on the banking sector following news that JPMorgan Chase won the weekend auction for troubled First Republic Bank.
The corporate earnings season is also rolling on, with Ford, Starbucks, Advanced Micro Devices and Caesars Entertainment set to report after the opening bell.
On the economic front, investors will look out for data on job openings, factory orders and light vehicle sales.