Dow plunges 600 points as traders worry about bigger rate hikes, JPMorgan tumbles after earnings

Stocks fell on Thursday as big bank earnings kicked off with disappointing results and traders weighed the possibility of even tighter U.S. monetary policy based on June inflation data.

The Dow Jones Industrial Average lost 625 points, or 2.02%, while the S&P 500 fell 2.09%. The Nasdaq Composite fell 2.11%.

Earnings results from major banks on Thursday offered further clues to the health of the US economy. JPMorgan Chase fell 5% after reporting quarterly results that beat analysts’ expectations and halted buybacks. Morgan Stanley also plunged following a failure on the top and bottom lines. Goldman Sachs, which is expected to report results on Monday, lost 4%.

Big bank earnings season continues on Friday with results from Wells Fargo and Citigroup.

All Dow Jones stocks fell that day, led by declines in JPMorgan, Goldman Sachs and Chevron. Energy, Materials and Financials led the S&P 500 losses, down 2% each. Tech stocks Meta Platforms, Salesforce, Tesla and Amazon fell more than 1%.

Volatile oil prices also fell on Thursday, with West Texas Intermediate crude hitting its lowest level since February.

Thursday’s market moves come after June’s consumer price index hit 9.1% and opened the door for a big Federal Reserve rate hike later this month, with the market at Fed funds term now forecasting a hike of up to 100 basis points. . The Beige Book, released by the Fed on Wednesday, showed concerns of a coming recession amid high inflation.

June’s CPI report also hit Treasuries and on Thursday sent the reversal, which is a popular signal of an impending recession, to its highest level since 2000.

“The bottom line for investors is that Fed policy remains data driven and the central bank will continue on an aggressive tightening path until inflationary pressures peak decisively,” the strategists at BCA Research wrote. in a note. “Ongoing price pressures call for another big upside at the July 26-27 FOMC, but there is still room for data to improve ahead of the September meeting, 8 weeks later.”

The June Producer Price Index report, which measures the prices paid to producers of goods and services, showed wholesale prices rose 11.3% last month, with prices for energy having surged and offered new insights into the health of the economy.

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Post expires at 8:04pm on Thursday July 21st, 2022