Why Did Wall Street Fall Hard Wednesday? These 2 Stocks Have Some Answers

Investors haven't been able to catch a break for quite a while. Though it seemed that stocks were experiencing some upward momentum to start 2023, Wall Street dealt bullish investors a blow on Wednesday. Declines of between 1% and 2% for the Dow Jones Industrial Average (^DJI 0.56%), Nasdaq Composite (^IXIC -2.05%), and S&P 500 (^GSPC -0.88%) rained on January's parade.

Data source: Yahoo! Finance.

Financial stocks were a big drag on the overall market's performance Wednesday as investors remained concerned about the future path of interest rates and the impact of mounting federal debt levels on the U.S. budget and the economy. Declines for both Charles Schwab (SCHW 0.67%) and PNC Financial (PNC 2.98%) contributed to the concerns among investors in financial stocks, with their respective quarterly reports giving some insight into the challenges they continue to face.

Schwab shows the weakness of the investing world

Shares of Charles Schwab fell by 2.5% on Wednesday. The pioneering discount brokerage company reported fourth-quarter and full-year financial results that set a record for full-year earnings per share, but still left some investors wanting more.

On their face, Schwab's numbers held up well. Quarterly revenue rose 17% year over year to $5.50 billion, and adjusted net income rose 21% to $2.15 billion, producing adjusted earnings of $1.07 per share. That closed a year of 12% sales growth and a 19% rise in adjusted net income for the brokerage company.

Even amid a challenging period in the markets, more investors turned to Schwab for assistance. The company brought in net new assets of $428 billion, finishing the year with more than $7 trillion in client assets. Though weaker markets cost the company's customers more than $1.5 trillion in asset value, Schwab added 4 million brokerage accounts to approach the 34 million mark by year's end.

The decline in Schwab stock on Wednesday shows just how picky shareholders are about financial results right now. If a bull market comes back in 2023, it could drive even stronger results for Schwab -- and a potential rebound for its stock price.

PNC falls short

Shares of PNC Financial dropped by 6% on the day. The decline came despite fourth-quarter results from the Pittsburgh-based bank that included annual gains in revenue and net income.

PNC's quarterly numbers were mixed relative to where the bank was three months ago. Revenue of $5.8 billion was up 4% as net interest income climbed by 6% year over year. However, increases in noninterest expenses, largely due to variable compensation costs, contributed to a 6% drop in net income to $1.5 billion. The year-over-year numbers showed similar trends, with adjusted net income also declining modestly from where it was in the fourth quarter of 2021.

CEO Bill Demchak pointed to loan growth, expense controls, and a commitment to maintaining high credit quality as factors that allowed PNC to return money to shareholders throughout 2022. Demchak was optimistic that 2023 could see similar strength from the bank, even under potentially difficult economic conditions.

Investors have liked PNC's ample dividends, and the nation's sixth-largest bank has a strong and solid business. Yet that doesn't mean it's not vulnerable to a potential economic downturn, and worries about the future of the U.S. economy appear to have played a role in holding PNC stock back on Wednesday -- as well as weighing on the fortunes of the entire stock market.