Stocks fell on Friday after a series of top earnings at big banks stoked fears that the Federal Reserve would raise interest rates at its next two meetings.
However, the main indices rose over the week. The Dow Jones rose 400 points, or 1.2%. The S&P 500 gained 0.8% and the Nasdaq Composite rose 0.3%.
JPMorgan Chase on Friday reported first-quarter profit and revenue that beat expectations, boosted by the Fed’s interest rate hike campaign. Citigroup, Wells Fargo and PNC Financial also posted strong results.
CEO Jamie Dimon warned investors on the company’s post-earnings conference call that they should prepare for higher-than-expected interest rates for longer than expected.
Wall Street seems to have taken notice. Analysts increased their bets on a rate hike by a quarter point at the Fed meeting in May and another in June.
Federal Reserve Governor Christopher Waller said on Friday that the central bank should continue to tighten monetary policy, which would further weigh on markets.
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said it was “entirely” possible the United States could enter a mild recession after last month’s banking tumult.
At the same time, retail sales data fell more than expected, suggesting that Americans’ purchasing power and the US economy are weakening.
Consumer confidence remained relatively stable in April, although fears of 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 bottom line is that the Fed has room to do even more harm,” Edward Moya, senior market analyst at OANDA, said in a note.
The Dow Jones slid 144 points, or 0.4%.
The S&P 500 fell 0.2%.
The Nasdaq Composite fell 0.4%.
As stocks stabilize after the trading day, levels may still change slightly.