Wall Street dips, dollar gains on mixed earnings, economic worries

Wall Street headed lower and the safe-haven dollar strengthened as a spate of mixed earnings and soft economic data dampened investor risk appetite.

All three major indexes were in negative territory, with megacap tech and tech-adjacent shares dragging the Nasdaq to the sharpest decline. Those losses steepened after a report showing a steeper-than-expected decline in consumer confidence.

"It's a reflection of softness in the US economy and the need for the Fed not to be as aggressive as economists feared earlier on, implying they might stop (interest rate hikes) after the May increase," said Sam Stovall, chief investment strategist of CFRA Research in New York.

Earnings from a wide range of companies, including 3M Co, General Motors Co, PepsiCo, United Parcel Service Inc, McDonald's Inc and others, provided a mixed picture of corporate profit and outlook.

First Republic Bank, under pressure amid the regional bank liquidity crisis, reported a plunge in deposits which sent its shares, along with the broader KBW regional banking index sharply lower. Microsoft Corp and Alphabet Inc are slated to report after the bell.

"Investors are holding their breath for the earnings reports from Alphabet and Microsoft later in the day, and they’re worried that they may be disappointed," Stovall added. "(Investors are) worried about economic softness, made manifest by first quarter tech layoffs."

The Dow Jones Industrial Average fell 107.66 points, or 0.32%, to 33,767.74, the S&P 500 lost 31.7 points, or 0.77%, to 4,105.34 and the Nasdaq Composite dropped 110.40 points, or 0.92%, to 11,926.80.

European stocks lost ground as investors weighed generally upbeat earnings against comments by European Central Bank policymakers regarding the future path of interest rates. The pan-European STOXX 600 index lost 0.58% and MSCI's gauge of stocks across the globe shed 0.83%.

Emerging market stocks lost 1.34%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 1.39% lower, while Japan's Nikkei rose 0.09%.

The greenback gained ground against a basket of world currencies as worries over corporate results and the global economic outlook deepened. The dollar index rose 0.46%, with the euro down 0.53% to $1.0983.

The Japanese yen strengthened 0.31% versus the greenback at 133.83 per dollar, while Sterling was last trading at $1.2399, down 0.66% on the day.

Benchmark Treasury yields extended their drop but three-month yields jumped as market participants juggled concerns over the looming debt ceiling deadline and ongoing concerns - exacerbated by First Republic results - of a liquidity crisis in the regional banking sector.

Benchmark 10-year notes last rose 30/32 in price to yield 3.4033%, from 3.515% late on Monday. The 30-year bond last rose 51/32 in price to yield 3.6395%, from 3.729% late on Monday.

Crude prices reversed Monday's gain, plunging as economic worries offset optimism over China demand expectations. US crude fell 2.81% to $76.55 per barrel and Brent was last at $80.53, down 2.44% on the day.

Gold prices dipped in opposition to the dollar's gain as investors awaited key economic data that could sway the Federal Reserve's policy rate decision next week. Spot gold dropped 0.2% to $1,985.80 an ounce.