Wall Street slips as remarks from bank executives fan growth fears

Wall Street slips as remarks from bank executives fan growth fears

Nearly all the major S&P 500 sectors were in the red, with financials down 1.1 per cent and in the lead, while information technology stocks fell 0.5 per cent. — Reuters pic

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Friday, 13 Jan 2023 11:51 PM MYT

NEW YORK, Jan 13 — Wall Street’s main indexes dipped today as remarks from major US bank executives deepened concerns about the Federal Reserve’s monetary tightening slowing economic growth, while Tesla slumped on news of price cuts.

Major US banks stockpiled more rainy-day funds to prepare for a possible recession and reported weak investment banking results, but said consumers remained healthy and higher rates boosted profits.

JPMorgan Chase & Co fell 1.2 per cent as it set aside US$1.4 billion (RM6.1 billion) in anticipation of a mild recession, even after beating quarterly profit estimates.

The bank’s Chief Executive Jamie Dimon listed a number of uncertainties facing the economy including geopolitical tensions and sticky inflation.

Bank of America Corp reported better-than-expected profit, with CEO Brian Moynihan also acknowledging an “increasingly slowing economic environment”. Its shares fell 2.7 per cent.

“Some of the comments about fears of a recession and (the banks) trying to continue to fortify their balance sheet against loan losses have more people nervous,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Wells Fargo & Co and Citigroup Inc fell short of quarterly profit estimates, sending their shares down 3.9 per cent and 0.6 per cent respectively.

Tesla Inc slid 4.1 per cent after slashing prices on its electric vehicles in the United States and Europe by as much as 20 per cent after missing 2022 deliveries estimates.

Nearly all the major S&P 500 sectors were in the red, with financials down 1.1 per cent and in the lead, while information technology stocks fell 0.5 per cent.

Keeping the pressure off the Dow Jones, UnitedHealth Group Inc rose 1.9 per cent after beating Wall Street expectations for fourth-quarter profit.

Earnings from the big banks, which kicked off the quarterly reporting season, had been awaited in earnest for clues on outlook for the US economy.

Wall Street’s main indexes gained yesterday after consumer prices fell for the first time in more than 2-1/2 years last month, fueling hopes for a sustained downward trend in price pressures that could give the Fed room to scale down the size of its rate hikes.

Money market participants see a 91.6 per cent chance the Fed will hike the benchmark rate by 25 basis points in February, but see the terminal rate at 4.93 per cent by June after the December inflation print.

Hopes of a less hawkish monetary policy stance by the Fed have supported equities in 2023, with the tech-heavy Nasdaq and the benchmark S&P 500 up 4.8 per cent and 3.4 per cent, respectively, this year.

At 10:07 a.m. ET, the Dow Jones Industrial Average was down 43.22 points, or 0.13 per cent, at 34,146.75, the S&P 500 was down 15.71 points, or 0.39 per cent, at 3,967.46, and the Nasdaq Composite was down 33.05 points, or 0.30 per cent, at 10,968.06.

Delta Air Lines Inc fell 4.7 per cent as the company forecast first-quarter profit below expectations.

Declining issues outnumbered advancers for a 1.82-to-1 ratio on the NYSE and a 1.16-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and one new low, while the Nasdaq recorded 43 new highs and five new lows. — Reuters

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