April 13, 2024
Dow suffers fourth straight fall as Disney sinks; regional bank woes back in spotlight

Dow suffers fourth straight fall as Disney sinks; regional bank woes back in spotlight

U.S. stocks closed mostly lower on Thursday, with the Dow Jones Industrial Average leading the way down as disappointing earnings from Disney weighed on the blue-chip gauge, while investors grappled with another selloff in shares of regional banks and the threat of a U.S. debt default.

How are stocks trading

  • The Dow Jones Industrial Average DJIA dropped 221.82 points, or 0.7%, to end at 33,309.51.
  • The S&P 500 SPX, -0.17% fell 7.02 points, or 0.2%, to close at 4,130.62.
  • The Nasdaq Composite COMP, +0.18% rose 22.06 points, or 0.2%, finishing at 12,328.50.

Major U.S. equity indexes were on track for weekly losses, with only the Nasdaq on track to log a weekly gain. The tech-heavy index closed at its highest level since August earlier this week, meeting the criteria to exit a bear market. It was within striking distance of a fresh 9-month intraday day on Thursday.

What’s driving markets

U.S. stocks traded lower on Thursday as investors digested earnings from Disney Co. DIS, -8.73% that raised new questions about the media giant’s foray into streaming.

Disney shares fell 8.7%, making it the worst-performing stock on the Dow, according to FactSet data. The company announced it lost 4 million subscribers in the last quarter after hiking prices for its streaming service, Disney+.

“Disney is an important economic indicator and its financial results speak volumes about the state of the consumer, which remains a mixed picture,” said David Trainer, CEO of New Constructs, in emailed commentary.

Shares of PacWest Bancorp PACW, -22.70% fell 22.7% after the company disclosed a 9% decline in deposits in recent weeks. The SPDR S&P Regional Bank ETF KRE, -2.48% lost 2.5%.

Read: PacWest leads regional-bank stock declines as it reports a deposit drop in early May

Following Wednesday’s report on U.S. consumer-price inflation, investors received an update on wholesale prices in the form of the producer-price index for April, released before the market open on Thursday. The index’s headline number showed wholesale prices grew by just 0.2% last month, lower than the 0.3% increase economists polled by The Wall Street Journal had expected.

See: Regional-bank woes have traders seeing almost 50% chance of Fed rate cut in July

“A significant increase in layoffs and a renewed run on deposits at PacWest Bancorp are triggering a broad equity market selloff…At the same time, today’s Producer Price Index release, which depicts slowing headline inflation but persistent service price increases, has failed to boost investor sentiment,” said Jose Torres, senior economist at Interactive Brokers, in a note.

The latest batch of inflation data affirmed that inflation isn’t slowing quickly enough for the market’s liking, analysts said. On top of this, the threat of a potential default on U.S. debt continued to loom over markets.

“It wasn’t a terrible number, but it wasn’t as good as people had hoped for,” said Mark Grant, chief global strategist at Colliers Securities, during a phone interview. “That’s one issue going on with the equity market today.

Others highlighted the fact that the S&P 500 remained rangebound, with markets struggling to pick a direction, even as the large-cap index is on track to log a second straight weekly decline.

“Today’s moves are consistent with the rangebound action that we’ve seen recently,” said Ari Wald, head of technical analysis at Oppenheimer & Co., during a phone interview. “We’re still stuck between a bull and a bear.”

Minneapolis Fed President Neel Kashkari heaped more pressure on stocks, Grant said, by reiterating that he would support more interest-rate hikes from the Federal Reserve until inflation returns to the central bank’s 2% target. Fed Chair Jerome Powell hinted last week that the Fed would pause its campaign of interest-rate hikes after delivering its latest 25 basis point rate raise last week.

Companies in focus

  • Robinhood Markets Inc. HOOD, +6.39% shares rose 6.4%, after the trading app reported better-than-expected first-quarter results and said it planned to launch a service next week that will allow users to trade individual stocks 24 hours a day, five days a week.
  • Beyond Meat Inc. BYND, -18.27% posted better-than-expected quarterly sales and full-year revenue guidance on Wednesday, but shares fell 18.3%. The plant-based meat maker had struggled the last few quarters as the faux meat market lost favor with some consumers.
  • Unity Software Inc.‘s stock U, +12.94% jumped 12.9%, following a strong forecast for the videogame-software company. Rival Applovin Corp. APP, +23.53% also saw its stock increase after its earnings report.

Key Words: Robinhood CEO says move to 24-hour trading for individual stocks is overdue. Skeptics see no need.

—Jamie Chisholm contributed to this article.

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