Shares fell on Thursday as earnings at the big bank started with disappointing results and traders gauged the possibility of an even tighter US monetary policy based on June inflation data.
The Dow Jones Industrial Average dropped 438 points, or 1.43%, while the S&P 500 dropped 1.33%. The Nasdaq Composite lost 1.1%. Equities were on track for a one-week loss, with the Dow and the S&P down 3% and 3.7%, respectively.
“If banks are the barometer of the entire economy as well as what we’re likely to get from other earnings reports, it’s going to be an ugly quarter,” said Sam Stovall, chief investment strategist at CFRA.
Earnings results from major banks on Thursday gave further indications about the health of the US economy as fears of a recession grew. JPMorgan Chase shares sink after 4% The bank increased reserves for bad loans and halted its share buybacks, indicating a more cautious economic outlook.
Morgan Stanley Fall behind the rise in shares Investment banking revenue declined, while Goldman Sachs, which is set to report earnings on Monday, slipped 2.8%. Earnings for the big banks continued on Friday with results from Wells Fargo and Citigroup.
Losses in JPMorgan, Goldman Sachs and Travelers led the Dow on Thursday, while energy, materials and financial stocks were among the S&P 500’s worst performers. Mosaic shares fell more than 5%, energy companies Halliburton and EOG Resources fell more than 4%, and tech stocks Meta Platform, Salesforce, Tesla and Amazon slipped 1%.
Thursday’s market moves come after Consumer Price Index for June warmed up to 9.1% and opened the door for a major Federal Reserve rate hike with Fed funds later this month Now the same increase in prices in the futures market 100 basis points.
Federal Reserve Governor’s Comments Christopher Waller eased some of those fears on Thursday as he said he was ready to consider a bigger hikeBut the market is “kind of getting ahead of itself.”
Strategists at BCA Research wrote in a note, “The conclusion for investors is that Fed policy remains data-dependent and that the central bank will continue on an aggressively tightening trajectory until inflation pressures have decisively peaked.” ” “Constant price pressure calls for another massive upward move in the July 26-27 FOMC, but there is still room for correction in the data ahead of the September meeting 8 weeks later.”
Volatile oil prices also fell on Thursday, with West Texas Intermediate crude hitting its lowest level since February.
In other news, on Thursday the reversal between the 2-year and 10-year rates, a popular sign of an impending recession, hit its biggest gap since 2000.
The Producer Price Index report for June, which measures the prices paid to producers of goods and services, Last month saw an increase of 11.3% in wholesale prices compared to a year ago As energy prices skyrocketed and offered more insight into the health of the economy.