- Major U.S. equities indexes fell on May 2, 2023, with an interest rate decision looming and amid worries about the banking sector.
- Investors scrambled toward "safe havens," moving money out of stocks and into bonds.
- Shares of regional banks tumbled a day after First Republic became the third mid-sized bank to fail in 2023.
U.S. equities tumbled on May 2 ahead of the coming day's Federal Reserve decision on interest rates and worries about the strength of the banking sector.
It's expected that the Fed will once again increase borrowing costs, raising concerns that the policymakers' efforts to bring down inflation could lead to a recession. Investors rushed to "safe havens," pulling money out of stocks and into bonds, sending the yield on the 10-year Treasury sinking. Gold and silver prices jumped as well.
All but three of the stocks in the Dow were in negative territory. Chevron (CVX) shares tumbled 4%, and shares of rival oil companies also declined, as crude futures plunged 5% over fears of an economic slowdown. Retail stocks lost ground. Walgreens Boots Alliance (WBA) shares dipped 3%, and Home Depot (HD) shares lost 1%. Shares of American Express (AXP), Visa (V), and other credit card providers declined.
Banking stocks dropped a day after First Republic became the third mid-sized bank to fail this year. Shares of Comerica (CMA), Zions Bancorporation (ZION), PacWest Bancorp (PACW), Western Alliance Bancorporation (WAL), and other regional banks fell.
Arista Networks (ANET) warned that some of its biggest customers may be planning to cut back spending, and shares of the networking equipment maker plunged. DuPont (DD) shares were in the red after the materials manufacturer gave current quarter guidance that missed forecasts. Chegg (CHGG) shares lost about half their value as the online educational company warned that student use of the ChatGPT chatbot is hurting its customer growth.
Uber Shares Get a Lift
Molson Coors (TAP) was the best-performing stock in the S&P 500 as the beer maker posted better-than-expected earnings and revenue. Uber Technologies (UBER) also beat forecasts, and shares of the ridesharing firm took off. Broadridge Financial Solutions (BR) shares jumped as the financial tech firm exceeded profit estimates. Rising gold prices boosted shares of Newmont Corporation (NEM) and other gold miners.
The U.S. dollar dipped against the euro and yen but rose versus the pound. Most major cryptocurrencies traded higher.