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Stocks tumbled on Friday after an earnings call from big banks fueled concerns that the Federal Reserve will raise interest rates at its next two meetings.
Still, the major indices gained during the week. The Dow rose 400 points, or 1.2%. The S&P 500 gained 0.8% and the Nasdaq Composite advanced 0.3%.
JPMorgan Chase on Friday reported first-quarter earnings and revenue that beat expectations, boosted by the Fed’s interest rate hike campaign. Citigroup, Wells Fargo and PNC Financial also reported strong results.
CEO Jamie Dimon warned investors on the company’s post-earnings conference call to prepare for interest rates to be higher for longer than expected.
Wall Street seems to have taken note. Analysts 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, which will hit markets further.
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said it is “definitely” possible that the United States could slip into a mild recession after last month’s banking riot.
Meanwhile, retail sales data fell more than expected, suggesting that the purchasing power of Americans and the US economy are weakening.
Consumer confidence held fairly steady in April, even as concerns about a recession persist, according to the latest monthly survey from the University of Michigan.
“There was too much news to digest this morning, but the key takeaway is that the Fed has room to do more damage,” Edward Moya, a senior market analyst at OANDA, said in a note.
The Dow fell 144 points, or 0.4%.
The S&P 500 fell 0.2%.
The Nasdaq Composite sank 0.4%.
As the stock settles out after the trading day, the levels could still change slightly.
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