- Stocks set for weaker open as JPMorgan holds back bank stock gains, hawkish Fed and weak retail sales tame bulls.
- Las Vegas Sands, MGM and Wynn Resorts surge after Macau issues new rules for casino permits in the world’s biggest gaming bu.
- JPMorgan slides after Q4 earnings beat clouded by loan loss release, weak net interest income outlook.
- Citigroup tops Q4 forecasts, but gets dragged by JPMorgan and the broader bank stock sector.
- Peloton extends slide as stock is removed from Nasdaq 100 index.
- Benchmark 10-year note yields fall to 1.74% after a sharp decline in core December retail sales.
Updated at 11:30 am EST.
U.S. stocks traded lower Friday, lead by a slide in bank and tech stocks, amid concerns over the hawkish tone from the Federal Reserve and the unofficial start of the fourth quarter earnings season.
A mixed report from JPMorgan (JPM) – Get JPMorgan Chase & Co. Report unsettled investors and reversed earlier pre-market gains as the country’s biggest bank forecast a weaker-than-expected year for net interest income, a key profit metric, and only topped Street earnings forecasts by releasing $1.8 billion in loan loss provisions.
A weaker-than-expected reading for December retail sales also weighed on stocks, with the core figure falling 2.5% amid surging inflation and Omicron disruptions.
Fed Governor Lael Brainard’s testimony to the Senate Banking Committee yesterday underscored the central bank’s commitment to lowering the country’s inflation rate — the fastest since 1982 — with rate hikes and reduced policy support when she told lawmakers that “our most important task … is focused on getting inflation back down to 2% while sustaining a recovery that includes everyone.”
Warnings from airline bosses about the impact of Omicron infections on travel demand, as well as the pace of the variant’s spread, are also raising concerns for growth in the broader economy, which is also seeing fiscal support being removed as lawmakers look to mid-term elections later in the year.
Fourth quarter earnings from three of the biggest banks on Wall Street — JPMorgan, Wells Fargo (WFC) – Get Wells Fargo & Company Report and Citigroup (C) – Get Citigroup Inc. Report — before the opening bell set the tone for early trading, but tech stocks are also likely to key on benchmark 10-year note yields, which slipped lower following the December retail sales data.
On Wall Street, the Dow Jones Industrial Average fell 350 points in late morning trading while the S&P 500 booked a 30 point move to the downside.
The tech-focused Nasdaq fell 60 points at the opening bell gain as benchmark 10-year Treasury note yields rose to 1.75% in New York trading.
On the upside, Las Vegas Sands (LVS) – Get Las Vegas Sands Corp. Report, MGM International (MGM) – Get MGM Resorts International Report and Wynn Resorts (WYNN) – Get Wynn Resorts, Limited Report shares surged higher in pre-market trading after officials in Macau set out plans to limit the number of casinos in the world’s largest gaming hub.
Wells Fargo was also higher, rising 2% after it posted fourth-quarter earnings that handily beat analysts’ forecasts amid broader improvement in the economy and net reserves.
JPMorgan, however, slumped 5.1% after it topped Street earnings forecasts, thanks in part to soaring investment banking fees, but noted both a $1.8 billion loan loss release and a softer net interest income outlook.
Citigroup (C) – Get Citigroup Inc. Report, too, fell nearly 2.7% despite posting stronger-than-expected fourth quarter earnings thanks in part to huge increases in investment banking fees.
Peloton (PTON) – Get Peloton Interactive, Inc. Class A Report shares slumped 1%, extending their six-month decline past 72%, after Nasdaq officials planned to remove the fitness equipment maker from its benchmark tech indices.
Global oil prices extended gains following stronger-than-expected import and trade surplus data from China, with WTI futures contracts for February delivery rising 80 cents from Thursday’s close to $82.92 per barrel.
In overseas trading Europe’s region-wide Stoxx 600 was marked 0.8% lower by mid-afternoon in Frankfurt while the MSCI Asia ex-Japan index fell 0.63% into the close of trading.