Stephen Culp
NEW YORK (Reuters) – U.S. stocks sold off on Friday after results from major U.S. banks underwhelmed, capping a week marked by market-heavy inflation data, changing expectations for U.S. Federal Reserve policy and looming geopolitical tensions.
All three major indexes fell more than 1% and posted losses for the week.
It recorded its biggest weekly percentage drop since January, and the steepest weekly decline since March 2023.
“When we look at what’s happened in the macro space, inflation has worsened sharply, and that puts more pressure on companies to report this season,” said Mike Dixon, head of research at Horizon Investments in Charlotte, North Carolina. . “Everyone is a little nervous about the intense focus on how good earnings need to be.”
Results from three major banks marked the unofficial start of first-quarter earnings season.
JPMorgan Chase & Co (NYSE:), the largest US bank by assets, reported profit growth of 6%, but its forecast for net interest income fell short of expectations. Its shares fell 6.5%.
Wells Fargo & Co shares began to slide after earnings fell 7% as net interest income fell due to weak borrowing demand.
Citigroup posted a loss after spending on employee severance and deposit insurance. Its shares fell 1.7%.
Economic data this week, especially Wednesday’s hotter-than-expected CPI report, suggests inflation may be more resilient than previously thought, prompting investors to revise expectations for the timing and extent of the Federal Reserve’s rate cuts. USA this year.
“There’s a very real risk that we won’t get any rate cuts this year,” Dixon said, adding that while he doesn’t expect a hike, the Fed would likely prefer to keep rates higher for longer. time.
“There’s just no data you can look at right now that says the Fed should cut rates.”
Boston Fed President Susan Collins said she expects several rate cuts this year, although inflation may take some time to return to target.
Austan Goolsbee, president of the Chicago Fed, said he remains focused on the personal consumer expenditures (PCE) report, due April 26, to get a clearer picture of whether inflation is moving toward the central bank’s target.
Geopolitical tensions continued to mount as Iran threatened to retaliate against Israel for an April 1 airstrike on its embassy in Damascus, adding impetus to the sell-off.
“Geopolitical risks are difficult to define, but they may keep energy prices rising, which will not help the CPI situation.”
The Dow Jones Industrial Average fell 475.84 points, or 1.24%, to 37,983.24. The S&P 500 lost 75.65 points, or 1.46%, to 5,123.41 and fell 267.10 points, or 1.62%, to 16,175.09.
All 11 major sectors of the S&P 500 index closed in the red, with commodities taking the biggest percentage losses.
Shares of Advanced Micro Devices (NASDAQ:) and Intel (NASDAQ:) fell 4.2% and 5.2%, respectively, after reports that Chinese officials earlier this year ordered the country’s largest telecom company to phase out foreign chips by 2027. .
US Steel shares fell 2.1% after shareholders voted to approve its proposed merger with Nippon Steel Corporation.
Declining issues outnumbered advancing issues by a 4.19-to-1 ratio on the NYSE; On the Nasdaq, a 3.16-to-1 ratio favored declines.
The S&P 500 hit 12 new 52-week highs and nine new lows; The Nasdaq Composite Index recorded 35 new highs and 211 new lows.
Volume on U.S. exchanges was 11.67 billion shares, compared with the full-session average of 11.41 billion over the past 20 trading days.