The stock market was set to end a week of victories on a sour note, as JPMorgan Chase Bank led banking stocks tumbling after it warned that a recession was the basis for the year.
Futures related to the Dow Jones Industrial Average fell 200 points, or 0.6%, while S&P 500 futures fell 0.7%. Nasdaq 100 futures fell 0.8%.
JPMorgan Chase reported revenue that exceeded expectations, but the bank warned against allocating more money to cover credit losses because a “moderate recession” is the “central issue”. The bank recorded provisions of $2.3 billion for credit losses in the quarter, up 49% from the third quarter. The stock fell more than 2%.
Wells Fargo shares fell 2% after the bank released its quarterly numbers. Bank of America stock also fell 2% before selling despite reporting better-than-expected fourth-quarter earnings.
Delta Airlines also reported earnings and revenue that beat estimates for the fourth quarter of 2022. However, the stock fell more than 5% in the primary market.
Investors have been awaiting these results to gain more insight into the health of the economy.
“As the tug of war intensifies among analysts over the prospects of a recession — and the depth of the recession — earnings reports from banks, along with their guidance, should help explain how companies and consumers are managing,” Quincy said. Crosby, chief global strategist at LPL Financial.
The moves came after a positive day for the three major indices. The Nasdaq Composite snapped gains on the fifth day – for the first time since July. Stocks rose broadly as the December CPI report showed prices fell 0.1% during the month of November. While prices rose at a 6.5% pace from a year earlier, the results fueled hopes that the Federal Reserve may soon slow its rally.
The Dow Jones Industrial Average added 216.96 points, or 0.64%. The S&P 500 and Nasdaq Composite Indexes gained 0.34% and 0.64%, respectively.
Stocks are heading for a winning week, with the Nasdaq and S&P on pace to post their best weekly performance since November. The Nasdaq was up 4.09% through Thursday’s close. The S&P advanced 2.26%, while the Dow Jones added 1.66%.