Traders work on the floor of the New York Stock Exchange on April 10, 2024.
Spencer Platt | Getty Images
Stocks fell on Friday as major U.S. banks kicked off the corporate earnings season while inflation and geopolitical concerns weighed on investors.
The Dow Jones Industrial Average slid 460 points, or 1.2%. The S&P 500 dipped 1.4%, while the Nasdaq Composite pulled back by 1.6%.
Week to date, the broad market index and 30-stock Dow are down 1.5% and 2.3%, respectively. Meanwhile, the tech-heavy Nasdaq is 0.5% lower for the week.
JPMorgan Chase shares declined more than 5% after the banking giant posted its first-quarter results. The bank said net interest income, a key measure of what it makes through lending activities, could be a little short of what Wall Street analysts are expecting in 2024. CEO Jamie Dimon also warned about persistent inflationary pressures weighing on the economy.
Wells Fargo slipped 0.1% after reporting its latest quarterly figures. Citigroup dropped more than 2% despite posting a revenue beat.
Oil prices continued their rise on reports that Israel is preparing for a direct attack by Iran this weekend, in what would be the biggest escalation of tensions in the region since the outbreak of the Israel-Hamas war last October. U.S. crude was last at $87.11 a barrel.
That, coupled with fresh U.S. imports data, added fuel to inflation concerns that have put pressure on the market.
“Inflation is too stubborn. That means less rate cuts and that’s not good for valuations,” Bob Doll, Crossmark Global CEO and chief investment officer, told CNBC’s “Squawk on the Street” on Friday.
The consumer sentiment index for April came in at 77.9, below the Dow Jones consensus estimate of 77.9, according to the University of Michigan’s Surveys of Consumers. Year-ahead and long-run inflation expectations also ticked up, reflecting frustrations over sticky inflation.
Investors are now having to come to terms with fewer rate cuts by the Federal Reserve this year, said Brad Conger, chief investment officer at Hirtle, Callaghan & Co.
“We’ve lost the immediate benefit of the forecast rate cuts. The market is saying interest rates are not supportive now, but it still has earnings to rely on,” said Conger.