Stocks fell on Friday after a series of earnings beats from big banks fueled concerns that the Federal Reserve will raise interest rates at its next two meetings.
However, the major indexes gained for the week. The Dow rose 400 points, or 1.2%. The S&P 500 gained 0.8% and the Nasdaq Composite advanced 0.3%.
JPMorgan Chase reported first-quarter profit and revenue that beat expectations on Friday, boosted by the Fed’s interest rate hike campaign. Citigroup, Wells Fargo and PNC Financial also reported strong results.
CEO Jamie Dimon warned investors on the company’s post-earnings conference call that they should prepare for interest rates to be higher for longer than they expected.
Wall Street seems to have taken note. Analysts increased their bets on a quarter-point rate hike at the Fed’s May meeting and another in June.
Federal Reserve Governor Christopher Waller said on Friday that the central bank must continue to tighten monetary policy, further weighing on markets.
Austan Goolsbee, president of the Federal Reserve Bank of Chicago, said it was “definitely” possible that the United States could slip into a mild recession after last month’s banking turmoil.
Meanwhile, data on retail sales fell more than expected, suggesting that Americans’ spending power and the US economy are weakening.
Consumer sentiment remained fairly steady in April, even as concerns about a recession persisted, according to the University of Michigan’s latest monthly survey.
“There was too much news to digest this morning, but the key takeaway is that the Fed has room to do more harm,” 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%.
As stocks settle after the trading day, levels could change slightly.