Stocks declined on Friday following impressive earnings results from major banks, which raised concerns about potential interest rate hikes by the Federal Reserve in the upcoming meetings. However, despite the dip, the major stock market indices managed to end the week with gains. The Dow climbed by 400 points or 1.2%, the S&P 500 rose by 0.8%, and the Nasdaq Composite advanced by 0.3%.
JPMorgan Chase reported better-than-expected first-quarter profit and revenue, benefiting from the Federal Reserve’s interest rate increase campaign. Additionally, Citigroup, Wells Fargo, and PNC Financial announced strong results.
During the conference call following the earnings report, CEO Jamie Dimon cautioned investors to prepare for higher interest rates that may persist for longer than anticipated.
Analysts on Wall Street took note of this warning, increasing their predictions of a quarter-point rate hike during the upcoming Fed meetings in May and June.
Federal Reserve Governor Christopher Waller expressed the view that the central bank should continue to tighten monetary policy, contributing to the negative sentiment in the markets.
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, stated that it is “definitely” possible for the United States to experience a mild recession after the recent turmoil in the banking sector.
Meanwhile, retail sales data indicated a larger decline than expected, reflecting a potential weakening of Americans’ spending power and the overall US economy.
According to the University of Michigan’s latest monthly survey, consumer sentiment remained relatively stable in April despite lingering concerns about a possible recession.
Edward Moya, senior market analyst at OANDA, highlighted the market’s reaction to the news, stating that “the key takeaway is that the Fed has room to do more harm.”
The Dow experienced a decline of 144 points or 0.4%.
The S&P 500 fell by 0.2%.
The Nasdaq Composite dropped by 0.4%.
Please note that these levels might still slightly change as stocks settle after the trading day.
