© Reuters. FILE PHOTO: Traders work on the trading floor of the New York Stock Exchange (NYSE) in New York City, US, March 31, 2023. REUTERS/Andrew Kelly
Written by Stephen Kolb
NEW YORK (Reuters) – Wall Street closed lower on Friday as a barrage of mixed economic data seemed to confirm another rate hike from the Federal Reserve, dampening investor enthusiasm after a string of big U.S. bank earnings kicked off the first quarter of the reporting season. .
All three major US stock indices closed in the red, but were far from their session lows. In the wake of Thursday’s strong rally, all major US stock indices posted weekly gains.
“Today we’re taking our breath a little bit,” said Sal Bruno, chief investment officer at Index IQ in New York. “After yesterday’s sharp upward move, the market may have gotten a little ahead of itself.”
Citigroup Inc (NYSE:), JPMorgan Chase & Co (NYSE:), Wells Fargo (NYSE: & Co) beat earnings expectations, benefiting from higher interest rates and easing concerns of stress in the banking system.
“As might be expected, the big banks may not have been hurt as much by the regional banking turmoil, and perhaps even the beneficiaries of it,” said Ross Mayfield, investment strategist at Baird in Louisville, Kentucky. “We’ve seen mostly strong and healthy balance sheets, and it’s quite clear (the regional banking crisis) is not systemic.”
The banking sector jumped 3.5% and JPMorgan Chase rose 7.6%, the biggest one-day percentage gain since November 9, 2020.
Citigroup advanced 4.8%, while Wells Fargo slipped 0.1%.
But a slew of mixed economic data including retail sales, industrial production and consumer confidence boosted expectations that the Federal Reserve will raise interest rates another 25 basis points at its policy meeting next month.
Bruno added, “Industrial production and energy utilization came out stronger than expected.” “Both point to the economy still enjoying some vitality, giving the Fed cover to continue its policy of rate hikes in May and possibly in June.”
Consensus growing for Fed rate hike in May https://www.reuters.com/graphics/USA-RATES/FEDWATCH/zdpxdayyrpx/chart.png
That forecast was underscored by Atlanta Fed President Raphael Bostic, who said another 25 basis point increase could allow the Fed to end its tightening cycle, even as Chicago Fed President Austin Goolsby called on the bank. Central to be careful.
At last glance, financial markets assigned a 74% chance of this happening, according to CME’s FedWatch tool.
It fell 143.22 points, or 0.42%, to 33,886.47 points. The S&P 500 lost 8.58 points, or 0.21%, at 4,137.64. It decreased 42.81 points, or 0.35%, to 12,123.47 points.
Of the 11 major sectors in the S&P 500, seven ended the session lower, with real estate lower. Financial enjoyed the biggest percentage jump, advancing 1.1%.
First quarter earnings season is in full swing next week, with results expected from many notable companies including Goldman Sachs Group Inc (NYSE:) Morgan Stanley (NYSE:), Bank of America Corp (NYSE:), Netflix Inc (NASDAQ:) and a long list of regional banks and industrial companies.
Analysts slashed expectations, expecting the S&P 500’s overall earnings to decline 4.8% from a year ago, a reversal of the 1.4% year-over-year gain at the start of the quarter, according to Refinitiv.
BlackRock Inc (NYSE) rose 3.1% after the world’s largest asset manager beat quarterly earnings expectations.
Boeing (NYSE:Co) fell 5.6% after the planemaker halted deliveries of about 737 MAXs due to a supplier quality issue attributed to Spirit AeroSystems (NYSE:Co), whose shares fell 20.7%.
Shares of Lucid Group Inc fell 6.3% after the release of disappointing first-quarter production and delivery numbers from the premium electric vehicle maker.
Declining issues outnumbered advancers on the NYSE by a ratio of 2.01 to 1; On the Nasdaq, the ratio was 2.07 to 1 in favor of declining stocks.
S&P 500 records 11 new 52-week highs and 2 new lows; The Nasdaq index posted 47 new highs and 205 new lows.
Trading volume on US stock exchanges reached 9.98 billion shares, compared to an average of 11.31 billion over the last 20 trading days.