U.S. stocks closed lower on Thursday dragged down by Disney as the company reported a sharp decline in subscribers, while concerns around regional banks once again grew, denting investors’ confidence. The S&P 500 and Dow ended in negative territory but the Nasdaq closed in the green.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.7% or 221.82 points to finish at 33,309.51 points. 

The S&P 500 declined 0.2% or 7.02 points to end at 4,130.82 points. Energy, utilities and materials stocks were the worst performers.

]The Energy Select Sector SPDR (XLE) and Utilities Select Sector SPDR (XLU) declined 1.2% and 1%, respectively. The Real Estate Select Sector SPDR (XLRE) and Materials Select Sector SPDR (XLB) also lost 1% each. Eight of the 11 sectors of the benchmark index ended in negative territory.

The tech-heavy Nasdaq rose 0.2% or 22.06 points to close at 12,328.50 points.

The fear-gauge CBOE Volatility Index (VIX) was down 0.06% to 16.93. Decliners outnumbered advancers on the NYSE by a 2.27-to-1 ratio. On Nasdaq, a 1.67-to-1 ratio favored declining issues. A total of 10.05 billion shares were traded on Thursday, lower than the last 20-session average of 10.69 billion.

Disney, Regional Banks Weigh on Markets

Markets closed higher on Wednesday following the fresh consumer price inflation reading but things changed on Thursday as investors digested earnings from The Walt Disney Company ((DIS Quick QuoteDIS - Free Report) ). The media giant’s shares fell 8.7% a day after it reported its quarterly results, making it the worst-performing stock on the Dow on Thursday.

Disney reported a loss of 4 million subscribers in the last quarter. The company said that the sharp decline in subscribers came after it hiked the subscription for its streaming service Disney+ in the last quarter.

However, Disney reported both earnings and revenues beat for the quarter. The company reported second-quarter fiscal 2023 adjusted earnings of $0.93 per share, beating the Zacks Consensus Estimate of $0.89 per share. Disney has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Also, investors’ concerns over regional banks once again grew on Thursday after PacWest Bancorp () said in a regulatory filing that its deposits declined 9.5% in the week of May 5. PacWest Bancorp is the latest bank to face a crisis in less than a month. The bank’s shares plummeted 22.7% after it said that it has access to $15 billion in immediate liquidity in case it was required.

This weighed on the stocks of other regional banks, which are already under pressure in the wake of the collapse of three regional banks in the past two months.

The decline came despite an impressive producer price index reading and fresh jobless data.

Economic Data

Following the consumer price index data, which was released on Wednesday, investors received a fresh reading on wholesale prices on Thursday, which rose less than expected. The producer price index (PPI) showed that wholesale prices grew just 0.2% month over month in April, after declining 0.4% in March. However, it was lower than analysts’ expectations of a rise of 0.3%.

Core PPI, which excludes the volatile food and energy prices, rose 0.2%, which came in line with expectations.

Year over year, PPI increased only 2.3% in April, down from March’s reading of 2.7%. This is also the lowest reading since January 2021.

Separately, the Labor Department reported that jobless claims totaled 264,000 for the week ending May 6, increasing 22,000 from the previous week’s unrevised level of 242,000. The four-week moving average was 245,250, an increase of 6,000 from the previous week’s unrevised average of 239,250.

Continuing claims came in at 1,814,000, an increase of 12,000 from the previous week’s revised level of 1801,000. The 4-week moving average was 1,829,500 an increase of 2,000 from the previous week's revised average of 1,827,250.