NEW YORK (AP) — U.S. stocks fell Friday after a mixed start to earnings season.
The S&P 500 was down 0.6% in early trading. As of 9:40 a.m. ET, the Dow Jones Industrial Average was down 192 points, or 0.5%, and the Nasdaq Composite Index was down 0.8%.
JPMorgan Chase & Co. fell 3.7% even after the company said its profit for the first three months of this year beat analysts’ expectations. The nation’s largest banks said their main sources of revenue this year will fall short of Wall Street expectations. That overshadowed better-than-expected profit reports from other big banks, including Citigroup, which rose 1.5%.
Companies are under constant pressure to generate greater profits. But it’s especially acute now given concerns that interest rates, another key determinant of stock prices, won’t move much higher in the near term.
A series of reports since the start of this year indicate that both inflation and the broader economy remain in a worse-than-expected state. Concerns that inflation will remain high have forced traders to sharply lower their expectations for how many times the Federal Reserve may cut its key interest rates this year. Traders are primarily betting on just two stocks, with at least six stocks underperforming expectations at the start of the year, according to CME Group data.
Stock prices had already risen to record levels, partly due to expectations for such rate cuts. Without interest rate relief, companies would need to generate higher profits to justify their stock prices, which critics say are already too high by a variety of measures.
This year’s rise in oil prices is adding to concerns as it could further increase inflationary pressures. It rose again on Friday amid continued tensions in the Middle East. Israel has said it could attack Iran directly if Iran launches an attack from its territory, following the bombing of the Iranian consulate in Syria that killed Iranian generals.
Benchmark U.S. crude oil rose 3% to $87.55 a barrel. Brent crude, the international standard, rose 2.2% to $91.67, back to October levels.
At the same time, bond markets saw yields on U.S. Treasuries fall and the price of gold rise, a phenomenon that often occurs when investors flock to investments deemed safer.
The yield on 10-year government bonds fell to 4.51% from 4.58%. Record-setting gold rose 1.7% to $2,411.90 an ounce.
On Wall Street, Wells Fargo rose 0.2% after it beat Wall Street’s profit target. It was Wells’ first financial report since the Biden administration eased some restrictions on the bank following a series of scandals.
Banks are heading into an earnings season in which analysts expect S&P 500 companies to grow for the third straight quarter, according to FactSet.
In overseas stock markets, indexes rose in most of Europe and fell in most of Asia.
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AP writers Matt Ott and Zimo Zhong contributed.
