US stocks finished lower as new concerns about the health of American regional lenders weighed on bank shares, despite big-tech earnings helping to support broader sentiment.
The S&P 500 fell 0.4% on Wednesday as First Republic Bank's troubles worsened. The regional bank fell 30% in another volatile session after the Federal Reserve was said to be considering borrowing restrictions. Treasuries fell following an auction, and US lawmakers are expected to vote on a debt ceiling bill in the early evening. Meanwhile, PacWest Bancorp offered a glimmer of hope that First Republic will not spell trouble for the industry as a whole. Its stock rose 7.5% on signs of a recovery in deposit levels.
The losses came as the tech-heavy Nasdaq 100 gained 0.6% after Alphabet, parent company of Google, and Microsoft both beat first-quarter earnings estimates late Tuesday. Alphabet was little changed, while Microsoft gained 7.2%, despite the UK's separate veto of Activision Blizzard.
A run on First Republic deposits has raised concerns about the impact of the Federal Reserve's aggressive rate hikes on US lenders and what the Fed can do to prevent a bank crisis from spreading. Some market participants believe the tightening cycle will end sooner than expected, despite the fact that inflation remains high. The PCE deflator, the Fed's preferred measure of inflation, is due Friday.