Stocks finish mixed as investors weigh rate hikes, recession fears

U.S. stocks extended losses Thursday as investors digested earnings and recession talk from Wall Street’s big banks while reeling from shock inflation data that raised the possibility of a 100 basis point rate hike later this month.

The S&P 500 and Dow Jones Industrial Average clawed back from session lows of nearly 2% but each closed down 0.3% and 0.5%, respectively. The tech-heavy Nasdaq teetered into positive territory to cap the session just above breakeven.

JPMorgan Chase (JPM) was in the spotlight Thursday after reporting a wider-than-expected drop in second-quarter profit of 28%, attributing the decline to a $1.1 billion in provision for credit losses amid concerns over a possible economic downturn. Shares closed down 3.5%.

“In our global economy, we are dealing with two conflicting factors, operating on different timetables,” CEO Jamie Dimon said. “The U.S. economy continues to grow and both the job market and consumer spending, and their ability to spend, remain healthy.”

JPMorgan Chase CEO Jamie Dimon speaks at the North America’s Building Trades Unions (NABTU) 2019 legislative conference in Washington, U.S., April 9, 2019. REUTERS/Jeenah Moon

“But geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go and the never-before-seen quantitative tightening and their effects on global liquidity, combined with the war in Ukraine and its harmful effect on global energy and food prices are very likely to have negative consequences on the global economy sometime down the road,” Dimon added.

Morgan Stanley (MS) revealed results that missed analyst expectations, dragged down primarily by a slump in investment banking revenue due to volatile market conditions. Shares capped the session 0.3% lower after paring a 2% loss.

These results also weighed on the broader financial sector, sending shares of bank peers Citi (C) and Wells Fargo (WFC) down over 3% and 0.9%, respectively ahead of their own earnings on Friday.

The moves across equity markets come after all three major indexes tumbled Wednesday following fresh…


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