Futures slip on First Republic's deposit flight, mixed earnings

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First Republic plunges on $100-bln deposit flight

UPS dives on bleak full-year revenue expectations

Microsoft, Alphabet earnings on deck after closing bell

Futures down: Dow 0.24%, S&P 0.41%, Nasdaq 0.32%

Updates prices throughout; adds details, comments

By Sruthi Shankar and Ankika Biswas

April 25 (Reuters) -U.S. stock index futures fell on Tuesday as a plunge in deposits of regional lender First Republic Bank stoked concerns about the banking sector, while investors parsed through earnings reports for clues on the health of corporate America and the economy.

First Republic Bank FRC.N tanked 21.5% in premarket trading after the beleaguered lender reported a more than $100 billion flight in deposits in the first quarter following the biggest banking crisis since 2008 last month.

Shares of regional banks PacWest Bancorp PACW.O and Western Alliance Bancorp WAL.N fell over 2% each.

The KBW Regional Banking index .KRX and the S&P 500 bank index SPXBK have shed 22% and 9%, respectively, so far this year as the collapse of two mid-sized lenders last month wreaked havoc on the banking sector.

"Rising interest rates are worrying depositors that small- and mid-sized lenders are going to be facing increasing difficulties, that the business models are too heavily dependant on a low interest rate environment," said Stuart Cole, head macro economist at Equiti Capital.

"The risk is that the cost of this emergency funding proves too expensive for the smaller banks and the market deems them to be no longer profitable."

Investors are also concerned about the impact of elevated inflation and aggressive interest rate hikes by the Federal Reserve on company margins.

PepsiCo Inc PEP.O rose 1.7% after raising its annual revenue and profit forecasts, while General Electric Co GE.N gained 1.4% on lifting the lower end of its full-year profit forecast.

United Parcel Service Inc UPS.N slid 4.7% after the delivery firm forecast full-year revenue to be at the lower end of its earlier estimate as it grapples with a weakening economy. Peer FedEx Corp FDX.N lost 2%.

McDonald's Corp's MCD.N gained 0.8% after first-quarter sales blasted past estimates on higher menu prices and more customer visits, while Verizon Communications Inc VZ.N lost 0.8% on missing first-quarter revenue estimates and reporting wireless subscriber losses.

In a busy week for earnings, 178 of the S&P 500 companies are expected to report first-quarter results. Analysts have largely maintained their forecast of a near-5% drop in first-quarter profit for S&P 500 companies through the start of the earnings season, according to Refinitiv data.

Earnings from trillion-dollar companies Alphabet Inc GOOGL.O and Microsoft Corp MSFT.O due after market close on Tuesday will be at the top of investors' watch list.

At 7:24 a.m. ET, Dow e-minis 1YMcv1 were down 82 points, or 0.24%, S&P 500 e-minis EScv1 were down 17 points, or 0.41%, and Nasdaq 100 e-minis NQcv1 were down 41.5 points, or 0.32%.

Investors are also awaiting the Fed's monetary policy decision in May for signals on the path of interest rates. Traders mostly expect the U.S. central bank to hike rates by 25 basis points next week and hold steady before cutting rates later this year.

Consumer Confidence Index for April and new home sales unit data for March are also on tap after the opening bell.

Among other stocks, Spotify Technology SA SPOT.N climbed 1.2% after first-quarter monthly active users crossed the half-billion mark for the first time, while 3M Co MMM.N gained 1.7% on the industrial conglomerate's plans to slash about 6,000 positions globally.

U.S. bank stocks lag in 2023 after March crisishttps://tmsnrt.rs/41U8cFt

Reporting by Sruthi Shankar and Ankika Biswas in Bengaluru
Editing by Vinay Dwivedi


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