NEW YORK (AP) — Stocks are slipping on Wall Street following some mixed earnings reports. Several beaten-down banks are also dropping more after a brief respite from a brutal run. The S&P 500 was 0.5% lower in early trading Tuesday. The Dow fell 100 points, or 0.3%, and the Nasdaq fell 0.5%. So far this earnings reporting season, the majority of companies have been topping forecasts for first-quarter results. That’s largely because expectations were set quite low due to a slowing economy and high interest rates. Companies in the S&P 500 are still on track to report a second straight quarter of weaker profits from year-earlier levels.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Wall Street drifted lower in premarket trading Tuesday ahead of more corporate earnings and new data on inflation in the U.S.
Futures for the Dow Jones industrials and S&P 500 each fell about 0.3% before the bell.
Regional banks are under pressure again after clawing back some losses in the previous two trading sessions. PacWest Bancorp fell more than 8% before the bell. Western Alliance Bancorp shares fell about 2%, similar to a handful of other mid-size regional banks that have become the focus of investors since Silicon Valley Bank and Signature Bank collapsed in mid-March.
Shares of electric automaker Lucid Group tumbled more than 10% in premarket after it posted a wider first-quarter loss than expected and missed sales targets. Other EV stocks including Rivian and Nikola were pulled lower.
The U.S. government will release monthly data on inflation at the consumer and wholesale levels on Wednesday. The plant-based meat maker Beyond Meat and Walt Disney will post quarterly earnings, as well as Toyota Motor Corp. in Japan.
The Federal Reserve has lifted its benchmark interest rate to a range of 5%-5.25%, up from virtually zero early last year, in hopes of slowing high inflation. High rates do that by slowing the economy and hurting prices for investments, which runs the risk of causing a recession if they stay too high for too long.
The Fed said it’s not sure of its next move, as swaths of the economy have shown sharp slowdowns but the job market remains largely resilient.
A report Monday from the Federal Reserve showed many banks tightened their lending standards during the first three months of the year. Not only that, the survey suggested banks widely expect to raise their standards over the course of 2023. Among the reasons some smaller and mid-sized banks gave for the forecast were wanting to take less risk and worries about deposit outflows.
“The survey showed a tightening of credit availability, impacting companies’ margins and signaling an imminent economic slowdown,” said Anderson Alves, analyst at ActivTrades.
The larger concern for markets is that all the turmoil could cause U.S. banks to pull back on their lending. That in turn could raise the risk of a recession that many investors already see as highly likely.
In Europe at midday, France’s CAC 40 slid 1%, while Germany’s DAX and Britain’s FTSE 100 each fell 0.4%.
Japan’s benchmark Nikkei 225 gained 1.0% to finish at 29,242.82. But other regional benchmarks fell.
Australia’s S&P/ASX 200 slipped 0.2% to 7,264.10. South Korea’s Kospi shed 0.1% to 2,510.06. Hong Kong’s Hang Seng lost 2.1% to 19,867.58, after new data on China’s trade showed declining imports. The Shanghai Composite dropped 1.1% to 3,357.67.
Chinese exports grew 8.5% in April, showing more unexpected strength despite weakening global demand, according to customs data. Exports grew to $295.4 billion compared with a year earlier, although at a slower pace, building on momentum seen in the March data when exports rose 14.8%.
But imports shrank at a faster pace, with the total slumping 7.9% to $205.2 billion compared to the same time last year, according to data Tuesday from the General Administration of Customs. It was down 1.4% in March. Trade with the U.S. and European Union showed a contraction in comparison with last year. China’s trade surplus in April widened, growing 82.3% compared to the same period last year.
In energy trading, benchmark U.S. crude fell 81 cents to $72.35 a barrel. Brent crude, the international standard, lost 80 cents to $76.21 a barrel.
In currency trading, the U.S. dollar inched up to 135.15 Japanese yen from 135.04 yen. The euro cost $1.0959, down from $1.1008.
Kageyama reported from Tokyo; Ott reported from Silver Spring, Md.
Yuri Kageyama And Matt Ott, The Associated Press