Dow falls more than 100 points as bank shares decline on recession fears
The stock market was set to end a winning week on a sour note Friday, as JPMorgan Chase led a decline in bank shares after it warned a recession was its base case for the year.
The Dow Jones Industrial Average fell 122 points, or 0.3%, while the S&P 500 slid 0.7%. The Nasdaq Composite dropped 0.7%, and was on pace to snap a five-day win streak.
Stocks are still headed for a winning week, with the Nasdaq on pace for their best weekly performance since November. The Nasdaq is up about 3% for the week. The S&P has advanced 1.5%, while the Dow has added 1%.
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 bank posted a $2.3 billion provision for credit losses in the quarter, a 49% increase from the third quarter. The stock fell more than 3%.
Wells Fargo shares fell nearly 4% after the bank reported its quarterly figures. Bank of America moved slightly lower despite reporting better-than-expected earnings for the fourth quarter.
Delta Air Lines also reported earnings and revenue that beat estimates for the final quarter of 2022. However, the stock slid about 6%.
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.