Joe McConnell
Stocks fell on Friday after a series of better-than-expected earnings reports from major banks fueled fears that the Federal Reserve will raise interest rates at its next two meetings.
However, major indexes gained during the week. The Dow rose 400 points, or 1.2%. The S&P 500 rose 0.8% and the Nasdaq Composite advanced 0.3%.
JPMorgan Chase reported first-quarter profit and revenue that beat expectations on Friday, boosted by the Fed’s interest rate hike campaign. Citigroup, Wells Fargo and PNC Financial also reported solid results.
During the company’s post-earnings conference call, CEO Jamie Dimon warned investors that they should prepare for higher interest rates for a longer period than expected.
Wall Street appears to have taken note. Analysts have increased their bets on a quarter-point rate hike at the Fed meeting in May and another in June.
Federal Reserve Governor Christopher Waller said on Friday that the central bank must continue to tighten monetary policy, further aggravating markets.
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said it was “definitely” possible that the U.S. could enter a mild recession after last month’s banking turmoil.
Meanwhile, retail sales data fell more than expected, suggesting that Americans’ spending power and the U.S. economy are weakening.
According to the latest monthly survey from the University of Michigan, consumer confidence remained fairly stable in April, despite lingering fears of a recession.
“There was too much news to digest this morning, but the bottom line is that the Fed still has room to do more damage,” Edward Moya, senior market analyst at OANDA, said in a note.
The Dow fell 144 points, or 0.4%.
The S&P 500 index fell 0.2%.
The Nasdaq Composite fell 0.4%.
As stocks stabilize after the trading day, levels may still fluctuate slightly.
