U.S. stocks ended lower as fresh concerns about the health of American regional lenders dragged down bank shares, even as big-tech earnings helped support broader sentiment.

The S&P 500 retreated 0.4 per cent as First Republic Bank’s woes deepened Wednesday. The regional bank plunged 30 per cent in another volatile session after it was said to face potential curbs on borrowing from the Federal Reserve. Treasuries fell after an auction, with U.S. lawmakers expected to vote on a debt ceiling bill in the early evening. Meanwhile, PacWest Bancorp offered a glimmer of hope that First Republic doesn’t portend trouble for the broader sector. Its shares rose 7.5 per cent amid signs of recovery in its deposit levels.

The losses came as the tech-heavy Nasdaq 100 rose 0.6 per cent after Google parent Alphabet Inc. and Microsoft Corp. both beat first-quarter earnings expectations late on Tuesday. Alphabet was little changed, while Microsoft rose 7.2 per cent, even as the UK separately vetoed a takeover of Activision Blizzard Inc. Meta Platforms Inc. is due to report after the bell.

A run on deposits at First Republic has raised questions about the effect of the Federal Reserve’s aggressive rate hikes on U.S. lenders and what the central bank can do to stop a bank crisis from spreading. Some market participants have speculated the tightening cycle may end sooner than expected, though inflation remains high. The Fed’s preferred measure of inflation, the so-called PCE deflator, is due Friday.

“Up to this point Fed officials have taken substantial comfort from indications that acute [bank] stress was contained and there was no immediate sudden stop to bank credit,” Krishna Guha, Evercore ISI’s head of central bank strategy, wrote. “That is a bit less firmly locked now, and we cannot rule out the possibility developments around First Republic could unfold in a manner that would lead the FOMC to skip [raising rates in] May while signaling a hike in June.”

In Europe, the regional stock benchmark declined 0.8 per cent amid disappointing earnings. Software producer Dassault Systemes sank after missing revenue estimates. Dutch chip-tool maker ASM International slumped after offering a tepid outlook for the rest of the year. Roche Holding AG retreated even as its first-quarter sales exceeded expectations. Meanwhile, beats from Standard Chartered Plc and Sweden’s SEB AB failed to bolster sentiment.

“The markets are very much focused on some of the earnings story, but possibly overlooking the weight of economic deceleration that is playing through right now, particularly in the United States,” John Woods, Asia Pacific chief investment officer at Credit Suisse Group AG, said on Bloomberg Television. “I’m looking at a whole range of technical signals, which seem to be suggesting a risk-off environment.”

Looking ahead, Tony Welch of SignatureFD said he expects tech earnings to continue to shine. 

“We always have to think about what the market has priced relative to expectations,” he said. “Throughout the first quarter of the year, the market was starting to price in, ‘Okay, things aren’t as bad for big tech as what we thought they were. They’re going to be able to preserve profit margins better than we thought they were.’ I suspect you’re going to see a decent beat rate among those names.”

Elsewhere in markets, oil fell, gold slid, and Bitcoin pared an advance.

Stocks

• The S&P 500 fell 0.4 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 0.6 per cent
• The Dow Jones Industrial Average fell 0.7 per cent
• The MSCI World index fell 1.3 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 0.2 per cent
• The euro rose 0.6 per cent to US$1.1035
• The British pound rose 0.4 per cent to US$1.2463
• The Japanese yen was little changed at 133.64 per dollar

Cryptocurrencies

• Bitcoin fell 0.6 per cent to US$27,809.64
• Ether fell 2.1 per cent to US$1,821.25

Bonds

• The yield on 10-year Treasuries advanced four basis points to 3.44 per cent
• Germany’s 10-year yield advanced one basis point to 2.40 per cent
• Britain’s 10-year yield advanced three basis points to 3.73 per cent

Commodities

• West Texas Intermediate crude fell 3.6 per cent to US$74.27 a barrel
• Gold futures fell 0.3 per cent to US$1,997.60 an ounce