Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, USA, July 13, 2022. REUTERS / Brendan McDermid
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- JPMorgan and Morgan Stanley report a loss of profits
- The PPI increases more than expected in June
- Conagra Brands falls into a negative prediction
- Dow is down 0.46%, S&P is down 0.30%, Nasdaq is up 0.03%
NEW YORK, July 14 (Reuters) – The S&P 500 (.SPX) cut early losses to close slightly lower on Thursday after investors digested disappointing quarterly results from two major US banks and inflation data higher than expected.
Initially, the top three U.S. stock indices sold strongly as a result of second-quarter earnings from JPMorgan Chase & Co and Morgan Stanley (MS.N). Both reported falling profits and warned of the impending economic slowdown.
Losses eased as the session progressed, with the advancement of microchip stocks (.SOX) helping drive the Nasdaq composite index to a nominal gain.
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“There was an irrational response to the results of JPMorgan and Morgan Stanley,” said Jay Hatfield, executive director and portfolio manager at InfraCap in New York. “It was no surprise that investment banking was weak.”
“JPMorgan warned that there is uncertainty in the market, but if you are alive and breathing, you know there is uncertainty in the market.”
JPMorgan CEO Jamie Dimon made a cautious note about the global economy as Morgan Stanley’s investment banking unit struggled to cope with the fall in global hiring. Read more
Shares of JPMorgan Chase and Morgan Stanley were down 3.5% and 0.4%, respectively, while the S&P Banks Index (.SPXBK) was down 2.4%.
Concerns about the slowdown worsened as the Department of Labor’s producer price index report echoed Wednesday’s consumer price index data, showing higher inflation than which was expected in June.
The sale began to ease after Fed Gov. Christopher Waller said he supported another interest rate hike of 75 basis points in July, easing concerns about a further rise. large of 100 basis points.
“The Fed will raise rates by 75, but they shouldn’t,” Hatfield said. “The Fed has already done a lot to reduce inflation, but they won’t realize it until they see it in the rearview mirror.”
“What we need to remember about the Fed is that it’s almost as if its third term is to be behind the curve,” Hatfield added.
On Wednesday, the chances of a larger rise grew after the CPI report, given the central bank’s intention to aggressively address decades of high inflation, a prospect that increases the chances of an economic contraction.
“There will be a recession, but a mild one,” said Oliver Pursche, senior vice president of Wealthspire Advisors in New York. “The key component is continued strength in the labor market. Given where we stand in the labor landscape, this is not an immediate threat.”
Underlying inflation, which eliminates food and energy prices, has continued to decline since the peak of March, although it remains well above the central bank’s average annual target of 2%:
The Dow Jones Industrial Average (.DJI) fell 142.62 points, or 0.46%, to 30,630.17, the S&P 500 (.SPX) lost 11.4 points, or 0.30%, to 3,790.38 and the Nasdaq Composite (.IXIC) totaled 3.60 points. 0.03%, at 11,251.19.
Eight of the 11 major sectors of the S&P 500 closed the day in negative territory, with finance (.SPSY) suffering the largest percentage loss, with a fall of 1.9%.
Tech (.SPLRCT) was the biggest benefit.
With the earnings season officially underway, analysts expect second-quarter S&P 500 year-over-year earnings growth of 5.1%, well below the 6.8% estimate at the beginning of the quarter, according to Refinitiv.
Shares of Taiwan Semiconductor Manufacturing listed in the US rose 2.9% after the chip maker’s optimistic revenue guidance. Read more
Conagra Brands (CAG.N) fell 7.2% after issuing an annual earnings forecast below estimates.
The decrease in emissions outnumbered those advanced on the NYSE by a ratio of 3.11 to 1; on the Nasdaq, a ratio of 2.12 to 1 favored declines.
The S&P 500 recorded a new 52-week high and 44 new lows; the Nasdaq Composite recorded nine highs and 294 new lows.
The stock market volume of the United States was 10.86 billion shares, compared to the average of 12.48 billion in the last 20 trading days.
(This story is corrected to add the word dropped to paragraph 13)
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Report by Stephen Culp; Additional report by Amruta Khandekar in Bangalore; Edited by Richard Chang
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