U.S. stocks fell Friday, as major Wall Street banks kicked off the earnings season with disappointing results, stoking worries about the strength of the upcoming earnings season at a time when inflation jitters remain front and center.
By 14:06 ET (18:06 GMT), the Dow Jones Industrial Average was down 523 points, or 1.4%, S&P 500 traded 79 points, or 1.5%, lower and NASDAQ Composite dropped1.7%.
Big banks disappoint on earnings stage
JPMorgan Chase (NYSE:JPM stock fell more than 5% after the banking giant forecast full-year income from interest payments below expectations as the industry prepares for widely expected Federal Reserve rate cuts.
Wells Fargo (NYSE:WFC) also dropped 0.4% despite beating revenue expectations, as the lender reported softer-than-expected net interest income numbers.
Citi, meanwhile, fell more than 2% despite reporting quarterly results that beat on both the top and bottom lines amid signs that turnaround efforts are bearing fruit.
The health of the banking sector is often be used as a measure of the strength of the economy as a whole, and uncertainty over the Fed’s interest rate outlook is set to hang over the first-quarter earnings season as a whole.
Analysts expect S&P 500 companies in aggregate to report earnings increased 5% in the first quarter from a year earlier, according to LSEG data, a sharp drop from the 10.1% growth seen in the fourth quarter of 2023.
Roku suffers cyberattack; Zoetis arthritis drug under scrutiny
Elsewhere, Roku (NASDAQ:ROKU) stock fell 2.8% after the streaming service provider said on Friday it has identified a second cyber attack that impacted about 576,000 accounts, after disclosing unauthorized access of 15,000 user accounts earlier this year.
Zoetis Inc (NYSE:ZTS) fell nearly 8% after the Wall Street journal reported that pet owners have filed complaints with regulators alleging that the company’s arthritis drugs Librela and Solensia caused side effects in their pets.
Inflation jitters remain front and center
The Michigan consumer sentiment index fell to 77.9 in April from 79.4 a month earlier, missing forecasts of 79.0 and the data also showed that the 1-year inflation expectations and 5-year expectations rose to 3.1% and 4% respectively, piling on worries about higher for longer interest rates.
The growing worries about inflation come just ahead of remarks from Fed speakers, including Bostic and Daly, as investors search for more information on the U.S. central bank’s future interest rate plans.
Crude higher on elevated geopolitical risks
Crude prices rose Friday as geopolitical risks, particularly in the oil-rich Middle East, remained elevated, but are set for weekly losses on concerns over U.S. monetary policy.
U.S. officials have predicted an attack by Iran against Israel shortly, in retaliation for a suspected Israeli air strike against a top Iranian military commander in Damascus earlier this week.
Iran, however, said that it will retaliate in a “calibrated” manner against Israel, signaling the Islamic Republic’s intention to avoid sparking a wider war in the Middle East tensions.
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