4:07pm: Disney and Boeing among those hindering the Dow
The Dow closed Thursday down 286 points, 0.9%, at 33,128, the Nasdaq Composite fell 59 points, 0.5%, to 11,966 and the S&P 500 slid 28 points, 0.7%, to 4,061. The small-cap Russell @000 index declined 23 points, 1.3%, to 1,717.
The DJIA turned negative for 2023 overall, dragged down by declines among Disney, Goldman Sachs, American Express and Boeing, among others.
Meanwhile, banking instability and the Fed's decision to enact another 0.25% rate hike have investors rattled. However, one could help the other, according to Keith Apton, managing director at UBS Wealth Management.
“I think it’s going to take care of the Fed’s job," Apton said. "...Regional lenders are going to have to constrain capital. I don’t think that money is going to flowing through the system nearly as easily the back half of this year and that indirectly is going to cool down the economy, which is ultimately going to do the Feds job by bringing inflation,."
“I do not think that the Fed will have to raise rates any further the rest of this year, although tomorrow’s data on the jobs reading will be important to watch,” he added.
12.05pm: PacWest stock drops 50% as bank considers selling itself
US stocks were lower in noon trading as regional bank contagion fears were reignited after PacWest Bancorp said it was assessing its strategic options, which includes a possible sale.
At midday, the Dow lost 425 points to 32,989, while the S&P 500 eased 36 points at 4,054 and the tech-heavy Nasdaq slipped 71 points to 11,955.
“Leaving rates this high is going to continue this stress,” DoubleLine CEO Jeffrey Gundlach said.
“I believe with a very high degree of probability there’s going to be further regional bank failures,” he added.
Other notable movers included shares of Qualcomm Incorporated, which fell more than 5% after the chipmaker’s guidance came in lighter than expected.
9:40am: Labor market softening, data shows
US stocks moved lower at the open as investors continued to weigh up the Fed’s rate hike decision yesterday amid pressure on regional bank stocks.
Just after the market opened, the S&P 500 was down 10 points or 0.2% at 4,081 points, the Dow Jones had shed 81 points or 0.2% at 33,333 points, and the Nasdaq Composite was down 30 points or 0.2% at 11,997 points.
Shares of PacWest were down 46.1% on reports it is exploring a sale, sending other regional bank stocks lower.
Meanwhile, initial jobless claims for last week which rose 13,000 over the previous week to 242,000, above the expected 240,000.
BRI Wealth Management portfolio manager Tom Hopkins noted that the four-week moving average, which removes week-to-week volatility, rose by 3,500 to 239,250.
“Today’s data is more evidence that rapid rise in interest rates is having consequences,” he said.
“The labour market has stayed surprisingly resilient however we are now seeing signs of softening as job openings in the economy have fallen to their lowest levels since May 2021, with recent layoffs totalling the highest number since 2020.
“The Federal Reserve is aware that it's raising interest rates to a level that may cause discomfort and unemployment to rise, but in a sense, that's precisely the objective as it attempts to combat inflation.”
7:50am: Regional bank stocks tank
US stocks indexes were seen starting cautiously again a day after the Federal Reserve raised rates by another 25 basis points, and failed to allay fears that further hikes may be necessary, while contagion fears hit the regional bank sector once more.
Futures for the blue-chip Dow Jones Industrial Average (DJIA) and the broader S&P 500 index were both 0.3% lower, although those for the tech-laden Nasdaq-100 were flat.
Stocks closed lower on Wednesday, with the DJIA shedding 270 points, or 0.8% to 33,414, while the S&P 500 dropped 0.7%, and the Nasdaq Composite shed 0.5%.
TickMill Group’s Market Analyst Patrick Munnelly commented: "As widely expected the US Federal Reserve raised interest rates by 25bps at their meeting last night. In his press conference, the Fed Chief, Powell was reticent about the notion of any Fed rate cuts into the back end of the year, Powell’s rhetoric during the press conference certainly hinted towards a pause in rate rises with the standard caveat of ‘data dependency’.
"Powell went to great lengths to assuage concerns regarding the regional banking sector in the US, however, post the press conference markets took a dive on news that PacWest Bancorp is set to consider strategic options and/or an asset sale."
Shares of PacWest dropped by more than 35% in premarket trading on Thursday and other regional bank shares also sold off, with Western Alliance tumbling 18% and Zions Bancorporation dropping about 7%.
Investors were also cautious ahead of key economic reports that will inform the Fed’s next rate moves, with the latest initial weekly jobless claims due today ahead of Friday’s main event, April’s non-farm payrolls report, which economists predict will rise by around 180,000.
On the corporate front, drugs firm Moderna will issue results before the opening bell, while tech giant Apple is set post earnings after the market close, along with Lyft, DraftKings and Coinbase.