On Friday, stocks fell after several earnings surprises from major banks heightened fears that the Federal Reserve will increase interest rates at its next two meetings.
Nonetheless, the key indices achieved gains for the week. The Dow advanced by 400 points, or 1.2%. The S&P 500 increased 0.8%, while the Nasdaq Composite rose 0.3%.
JPMorgan Chase announced Friday that its first-quarter profit and revenue surpassed expectations, bolstered by the Fed’s rate increase initiative. Citigroup, Wells Fargo, and PNC Financial also posted robust results.
CEO Jamie Dimon cautioned investors during the company’s post-earnings conference call that they should brace for interest rates to remain elevated longer than anticipated.
Wall Street appears to have noticed. Analysts have increased their wagers on a quarter-point rate hike at the Fed’s upcoming meeting in May and another in June.
Federal Reserve Governor Christopher Waller remarked on Friday that the central bank must persist in tightening monetary policy, which has further impacted the markets negatively.
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, indicated that it is “definitely” feasible for the United States to enter a mild recession following last month’s upheaval in banking.
In the meantime, retail sales data showed a more significant decline than anticipated, pointing to a weakening in Americans’ spending capability and the overall US economy.
Consumer confidence remained largely stable in April, despite ongoing recession apprehensions, as per the latest monthly survey conducted by the University of Michigan.
“This morning’s news was considerable, but the main point is that the Fed has the potential to inflict more damage,” remarked Edward Moya, senior market analyst at OANDA, in a note.
The Dow decreased by 144 points, or 0.4%.
The S&P 500 dropped 0.2%.
The Nasdaq Composite fell by 0.4%.
As stocks adjust following the trading day, levels may continue to fluctuate slightly.
