Stocks fell on Friday after a string of better-than-expected results from major banks stoked concerns that the Federal Reserve will raise interest rates at its next two meetings.
Still, the major averages rose this week. The Dow rose 400 points, or 1.2%. The S&P 500 rose 0.8% and the Nasdaq Composite gained 0.3%.
JPMorgan Chase & Co. reported on Friday that first-quarter profit and revenue topped expectations, boosted by the Federal Reserve’s move to raise interest rates. Citigroup, Wells Fargo and PNC Financial also reported strong results.
Chief Executive Officer Jamie Dimon warned investors on the company’s post-earnings conference call that they should prepare for a period of higher-than-expected interest rates.
Wall Street seems to have taken notice. Analysts have increased their bets on a 25 basis point rate hike at the Federal Reserve’s May and June meetings.
Federal Reserve Governor Christopher Waller said on Friday that the central bank needs to continue to tighten monetary policy, further weighing on markets.
Chicago Fed President Austen Goolsby said it was “absolutely” possible that the United States would enter a mild recession following last month’s banking turmoil.
Meanwhile, retail sales data fell more than expected, suggesting Americans’ spending power and the U.S. economy are weakening.
The latest monthly survey from the University of Michigan showed that consumer confidence remained fairly stable in April despite lingering worries about a recession.
“There is too much news to digest this morning, but the key takeaway is that the Fed has room to do more damage,” Edward Moya, senior market analyst at OANDA, said in a note.
The Dow fell 144 points, or 0.4%.
The S&P 500 fell 0.2%.
The Nasdaq Composite fell 0.4%.
Levels may still change slightly as stocks settle after the trading day.
