Investing.com -- The S&P 500 slumped Tuesday, weighed down by a string of underwhelming earnings from corporate America just ahead of the highly anticipated results from big tech.
The S&P 500 fell 1.4%, the Dow Jones Industrial Average was 1%, or 320 points lower, and the Nasdaq fell 1.7%.
Investor jitters in the banking sector returned after First Republic Bank (NYSE:FRC) plunged 40% to record lows after reporting mixed first-quarter results that also showed its deposit levels fell by $104 billion from a year earlier, much more than the expected $40B decline.
The decline in deposits forced the bank to “significantly increase its borrowings,” Wedbush says, pressuring core net interest margins, which is likely to continue to come “under substantial pressure in 2Q, negatively impacting the bank's earnings power significantly.”
The report soured sentiment on regional banks as the S&P Regional Banking ETF (NYSE:KRE) dropped more than 3%.
United Parcel Service Inc (NYSE:UPS), meanwhile, reported first-quarter results that missed on both the top and bottom lines, and the courier company warned that sales were expected to remain under pressure, sending its share price more than 9% lower.
“[A]lthough the macro environment remains a challenge across all transports, we continue to rate UPS shares a Buy due to valuation and secular outlook,” Goldman Sachs said in a note.
PepsiCo Inc (NASDAQ:PEP) was up more than 2%, sidestepping the selling after its quarterly results topped estimates on both the top and bottom lines as price hikes bolstered performance.
3M Company (NYSE:MMM) gave up gains to trade lower despite reporting earnings that topped Wall Street estimates and announcing plans to cut about 6,000 jobs.
McDonald’s (NYSE:MCD) and General Motors (NYSE:GM) were also in the red despite reporting quarterly results that topped estimates.
A slump in chip stocks, meanwhile, pushed tech lower just as Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) ready their quarterly results, due after markets close on Tuesday, with some on Wall Street touting optimism.
“I am quite optimistic that the very large index contributors will deliver earnings of high quality, and they're protecting their cash flows this year,” Neuberger Berman’s Charles Kantor said in a Bloomberg interview on Tuesday.
Energy stocks were the biggest drag on the broader market, pressured by falling oil prices amid concerns about the impact of potential slowing global growth on demand.
In other news, Biogen (NASDAQ:BIIB) fell more than 4% even as the Food and Drug Administration granted accelerated approval for its ALS drug, with regulatory approval conditional on a further study to verify the clinical benefits of the drug.