The stock market was set to end a winning week on a sour note as JPMorgan Chase led a decline in bank shares after it warned a recession was its base case for the year.
Futures tied to the Dow Jones Industrial Average fell 200 points, or 0.6%, while S&P 500 futures slid 0.7%. Nasdaq 100 futures dipped 0.8%.
JPMorgan Chase posted revenue that beat expectations, but the bank warned it was setting aside more money to cover credit losses because a “mild recession” is its “central case.” The stock fell more than 2%. Wells Fargo shares also fell 2% after the bank reported its quarterly figures.
Meanwhile, Bank of America reported better-than-expected earnings for the fourth quarter, but the stock was flat in the premarket.
Delta Air Lines also reported earnings and revenue that beat estimates for the final quarter of 2022. However, the stock slid more than 5% in the premarket.
Investors have been awaiting these results to gain more insight into the health of the economy.
“As the tug-of-war among analysts intensifies around the prospects for a recession — and the depth of a recession — the earnings reports from the banks, coupled with their guidance, should help clarify how businesses and consumers are managing,” said Quincy Krosby, LPL Financial’s chief global strategist.
The moves followed a positive day for the three major indexes. The Nasdaq Composite snatched its fifth day of gains — a first since July. Stocks rose broadly as December’s CPI report showed prices declined 0.1% over November. While prices rose at a 6.5% pace compared to the previous year, the results heightened hopes that the Federal Reserve may soon slow its hiking.
The Dow Jones Industrial Average added 216.96 points, or 0.64%. The S&P 500 and Nasdaq Composite gained 0.34% and 0.64%, respectively.
Stocks are headed for a winning week, with the Nasdaq and S&P on pace for their best weekly performance since November. The Nasdaq is up 4.09% through Thursday’s close. The S&P has advanced 2.26%, while the Dow has added 1.66%.