Stocks fell on Tuesday as the fallout from First Republic Bank's collapse renewed pressure on the financial sector and market participants looked ahead towards the Federal Reserve's latest policy decision. The Dow Jones Industrial Average fell over 365 points, while the S&P 500 Index and Nasdaq Composite lost nearly 1.2% and 1.1%, respectively.
Here's how the market settled on Tuesday:
S&P 500 Index (NYSE: SPY): -1.16% or -48.29 points to 4,119.58
Dow Jones Industrial Average (NYSE: DIA): -1.08% or -367.17 points to 33,684.53
Nasdaq Composite Index (NASDAQ: QQQ): -1.08% or -132.09 points to 12,080.51
Banks of all sizes fell on Tuesday, with the SPDR S&P Bank ETF (NYSE: KBE) falling over 5% as market participants continued to weigh the potential for more contagion across the industry after JPMorgan Chase (NYSE: JPM) purchased most of First Republic's assets and deposits on Monday. Other regional banks like PacWest Bancorp (NASDAQ: PACW) and Western Alliance Bancorporation (NYSE: WAL) also fell more than 25% and 15% during the session, respectively.
The Fed also began its two-day policy-setting meeting on Tuesday, with policymakers expected to issue another 25 basis-point interest rate hike on Wednesday. Investors will also be looking for clues for the central bank's next decision in June from Fed Chair Jerome Powell's speech scheduled for Wednesday afternoon following the meeting.
Comments from U.S. Treasury Secretary Janet Yellen also weighed on sentiment Tuesday, as she warned in a letter to House Speaker Kevin McCarthy that the U.S. may run out of measures to pay its debts as June 1, or much earlier than estimates that U.S. would reach its debt ceiling in late July.
In economic news for Tuesday, job openings fell to 9.6 million in March, according to the Bureau of Labor Statistics' Job Openings and Labor Turnover Survey (JOLTS), marking another sign that the labor market is starting to cool in response to the Fed's rate-hike campaign. Beneath the headline, the month's quits rate ticked down to 2.5% and layoffs increased to 1.8 million.
On the earnings front, Chegg shares dropped more than 40% after the online education company warned that ChatGPT is impacting its consumer growth rate. Still, the company posted strong Q1 results that beat expectations on top and bottom lines.
"In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups," CEO Dan Rosensweig said during an earnings call late Monday. "However, since March we saw a significant spike in student interest in ChatGPT. We now believe it's having an impact on our new customer growth rate."
Shares of Uber Technologies (NYSE: UBER) rose after the ride-hailing company beat first-quarter revenue expectations, with revenues rising 29% year-over-year. CEO Dara Khosrowshahi said in a statement that the company is off to a "strong start" for the year and the Uber is already using AI to predict "highly accurate" arrival times for rides and deliveries.
Looking ahead, market participants will turn their attention towards the Fed's latest policy decision on Wednesday, as well as earnings reports from AMD (NYSE: AMD), Starbucks (NASDAQ: SBUX), Ford (NYSE: F) after closing bell on Tuesday.