Shares increase losses amid mixed bank earnings, retail sales are missed

Shares fell Friday to increase losses following a technology-driven divestment on Thursday, with investors watching a mixed set of bank earnings and a larger-than-expected decline in U.S. retail sales.

Each of the S&P 500, Dow and Nasdaq fell. The Dow index performed worse, falling more than 1% just after the market opened, as the index’s banking stock components fell after delivering earnings. JPMorgan Chase (JPM) shares fell after the company lower than expected in the fourth quarter trade revenues and rising costs as compensation costs increased.

Peer bank Wells Fargo (WFC) shares, on the other hand, rose after post quarterly revenue it topped estimates when both corporate and consumer loans rose at the end of last year.

New economic data came weaker than expected on Friday, increases the risk-off tone in the markets. US retail sales fell 1.9% in December month-on-month, missing estimates for a decline of only 0.1%, marking the largest decline since February 2021. November sales were also revised downward to show a monthly increase of 0 .2% compared to the increase of 0.3% previously reported.

Investors this week weighed signs of sustained price pressure across the U.S. economy against claims by central bank officials that the Federal Reserve is ready to take steps to bring inflation down.

IN Fed Governor Lael Brainard’s hearing before the Senate Banking Committee on Thursday, she suggested that the central bank could start raising interest rates – a move that would tighten financial conditions and help bring down inflation – “as soon as asset purchases are completed.” The Federal Reserve is currently set to complete its downsizing process for buying assets in March.

“What we are seeing right now is a re-pricing of the markets, given expected rate hikes … It will be the catalyst that drives the market down,” WealthWise Financial CEO Loreen Gilbert told Yahoo Finance Live on Thursday. “It’s going to be a wild ride.”

And the amount of recent inflation data has so far helped strengthen the argument for a short-term pull on monetary policy, many economists suggested. Thursday’s producer price index (PPI) showed the largest annual increase in wholesale prices, in data dating back to 2010, although monthly price increases slowed slightly. And this report came just a day after the December Consumer Price Index (CPI), which showed the largest rise in inflation since 1982. Many economists suggested that inflationary pressures would continue at least through the first months of this year before gradually declining.

“Two of the biggest things have been supply chain disruptions and the tax stimulus,” Matthew Miskin, John Hancock Investment Management’s co-chief investment strategist, told Yahoo Finance Live. “As the pandemic comes more under control this year, as the Omicron wave hopefully disappears, we are likely to see supply chain disruptions disappear and then we will not have more fiscal stimuli … In our opinion, causing inflation to fall over the year.”

Rising prices have also hit corporate profits as labor costs rise. Of the nearly two dozen S&P 500 firms that reported fourth-quarter earnings in the middle of the week, 60% mentioned a negative impact from higher labor costs or a lack of sales or profits, according to FactSet.

9:30 ET: Equities open lower after disappointing economic data, mixed bank earnings

Here’s where the markets traded right after opening time Friday morning:

  • S&P 500 (^ GSPC): -28.25 (-0.61%) to 4,630.78

  • Dow (^ DJI): -337.64 (-0.76%) to 35,775.98

  • Nasdaq (^ IXIC): -51.93 (-0.34%) to 14,756.56

  • raw (CL = F): + $ 0.56 (+ 0.68%) to $ 82.68 per barrel

  • gold (GC = F): + $ 3.90 (+ 0.21%) to $ 1,825.30 pr. ounce

  • 10-year Treasury (^ TNX): +2.5 bps to give 1.734%

8:32 ET: Retail sales fell 1.9% in December, missing estimates

Retail sales fell sharply than expected in December, as consumer spending withdrew from earlier in 2021.

Total amount the value of US retail sales fell 1.9% in December compared to November, the Department of Commerce said Friday. This was the first monthly decline since July, and the largest decline since February 2021. Consensus economists had looked for a decline of only 0.1% according to Bloomberg data. In November, retail sales rose 0.2% and this figure was also downgraded. from the previous increase of 0.3 per cent. reported.

By category, non-store retailers, or e-commerce stores, experienced by far the largest decline in monthly retail sales, with a decline of 8.7% in December. Department stores also had a decrease of 7.0% in sales, and sales of furniture and home furnishings decreased by 5.5%. Still, the weakness was broad-based in December, and almost all categories of retailers experienced a monthly drop in sales. In particular, building materials stores saw a sales increase of almost 1% during the month, and sales of various retailers increased by 1.8%.

7:43 ET: ‘The economy continues to perform quite well despite headwinds related to the Omicron variant’: Dimon

JPMorgan Chase CEO Jamie Dimon struck an optimistic note about the trajectory of the economic recovery even given the recent disruption caused by the rapidly spreading Omicron variant.

“The economy continues to perform quite well despite headwinds related to the Omicron variant, inflation and bottlenecks in the supply chain,” Dimon said in the bank’s fourth quarter earnings report on Friday. “Credit continues to be healthy with exceptionally low net deductions, and we remain optimistic about US economic growth as business sentiment is optimistic and consumers benefit from job and wage growth.”

Both JPMorgan Chase and Wells Fargo cited an increase in loans as contributing to the results at the end of last year, suggesting that consumers and businesses remain secure on loans and spending.

However, JPMorgan’s fixed income and stock trading business saw sales fall compared to last year. Fixed income sales and trading income fell 16% compared to last year to $ 3.33 billion, which the bank attributed “a challenging trading environment in terms of exchange rates, as well as lower income in credit and currencies and new markets compared to a strong previous year.” Share sales and trading income fell 1.8% to 1.95 billion.

Overall, adjusted revenue grew 0.6% year-on-year to $ 30.35 billion, topping estimates at $ 30.01 billion, according to Bloomberg data. Earnings per share was $ 3.33, which exceeded expectations of $ 2.99.

7:32 ET Friday: Stock futures give up previous gains, pointing to a lower opening

Here’s where the markets traded before opening time:

  • S&P 500 futures (ES = F): -5 points (-0.11%), to 4,647.00

  • Dow futures (ÅM = F): -37 points (-0.1%) to 35,952.00

  • Nasdaq futures (NQ = F): -30.75 points (-0.2%) to 15,459.50

  • raw (CL = F): + $ 0.58 (+ 0.71%) to $ 82.70 per. barrel

  • gold (GC = F): + $ 0.90 (+ 0.05%) to $ 1,822.30 pr. ounce

  • 10-year Treasury (^ TNX): +3.3 bps to give 1.742%

18:01 ET Thursday: Stock futures open a little higher

Here is where the markets traded Thursday night:

  • S&P 500 futures (ES = F): + 4.25 points (+ 0.09%) to 4,656.25

  • Dow futures (ÅM = F): +37 points (+ 0.1%) to 36,026.00

  • Nasdaq futures (NQ = F): +18.75 points (+ 0.12%) to 15,509.00

Shares increase losses amid mixed bank earnings, retail sales are missed

NEW YORK, NEW YORK – JANUARY 11: Traders work on the floor of the New York Stock Exchange (NYSE) on January 11, 2022 in New York City. After yesterday’s sale, the Dow fell only slightly in morning trading. (Photo by Spencer Platt / Getty Images)

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

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