Wall Street’s main indexes dipped on Friday as remarks from major U.S. bank executives deepened concerns about the Federal Reserve’s monetary tightening slowing economic growth, while Tesla slumped on news of price cuts.
Major U.S. banks stockpiled more rainy-day funds to prepare for a possible recession and reported weak investment banking results, but said consumers remained healthy and higher rates boosted profits.
JPMorgan Chase & Co (JPM.N) fell 1.2% as it set aside $1.4 billion in anticipation of a mild recession, even after beating quarterly profit estimates.
The bank’s Chief Executive Jamie Dimon listed a number of uncertainties facing the economy including geopolitical tensions and sticky inflation.
Bank of America Corp (BAC.N) reported better-than-expected profit, with CEO Brian Moynihan also acknowledging an “increasingly slowing economic environment”. Its shares fell 2.7%.
“Some of the comments about fears of a recession and (the banks) trying to continue to fortify their balance sheet against loan losses have more people nervous,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
Wells Fargo & Co (WFC.N) and Citigroup Inc (C.N) fell short of quarterly profit estimates, sending their shares down 3.9% and 0.6% respectively.
Tesla Inc (TSLA.O) slid 4.1% after slashing prices on its electric vehicles in the United States and Europe by as much as 20% after missing 2022 deliveries estimates.
Nearly all the major S&P 500 sectors were in the red, with financials (.SPSY) down 1.1% and in the lead, while information technology stocks (.SPLRCT) fell 0.5%.
Keeping the pressure off the Dow Jones, UnitedHealth Group Inc (UNH.N) rose 1.9% after beating Wall Street expectations for fourth-quarter profit.
Earnings from the big banks, which kicked off the quarterly reporting season, had been awaited in earnest for clues on outlook for the U.S. economy.
Wall Street’s main indexes gained on Thursday after consumer prices fell for the first time in more than 2-1/2 years last month, fueling hopes for a sustained downward trend in price pressures that could give the Fed room to scale down the size of its rate hikes.
Money market participants see a 91.6% chance the Fed will hike the benchmark rate by 25 basis points in February, but see the terminal rate at 4.93% by June after the December inflation print.
Hopes of a less hawkish monetary policy stance by the Fed have supported equities in 2023, with the tech-heavy Nasdaq (.IXIC) and the benchmark S&P 500 (.SPX) up 4.8% and 3.4%, respectively, this year.
At 10:07 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 43.22 points, or 0.13%, at 34,146.75, the S&P 500 (.SPX) was down 15.71 points, or 0.39%, at 3,967.46, and the Nasdaq Composite (.IXIC) was down 33.05 points, or 0.30%, at 10,968.06.
Delta Air Lines Inc (DAL.N) fell 4.7% as the company forecast first-quarter profit below expectations.
Declining issues outnumbered advancers for a 1.82-to-1 ratio on the NYSE and a 1.16-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and one new low, while the Nasdaq recorded 43 new highs and five new lows.