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Stocks fall as major banks report earnings

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US stocks fell in early morning amid reports of key gains from financial heavyweights.

The S&P 500 (^GSPC) was down 0.8%, while the Dow Jones Industrial Average (^DJI) was down 0.6%. The tech-heavy Nasdaq Composite (^IXIC) was down about 0.8%.

Bond prices rose. The yield on the benchmark 10-year US Treasury bond rose slightly to 3.47%. The dollar index was up 0.21% to settle at $102.21.

America’s biggest banks took center stage to kick off the fourth quarter earnings season. Its earnings showed continued resilience in the face of economic headwinds, although many said they were taking steps to prepare for a US recession.

JPMorgan (JPM) reported better-than-expected fourth-quarter earnings as CEO Jamie Dimon said the US economy “remains strong”. However, the bank said its main argument for this year is a mild recession. JPMorgan said earnings for the three months through December were estimated at $11.1 billion, or $3.57 per share, up 7.2% from the same period last year.

Bank of America (BAC) reported fourth-quarter results that showed the bank’s revenue benefited from higher interest rates. Bank of America reported revenue of $24.5 billion for the quarter, beating estimates of $24.2 billion. This was 11% higher than the year-ago quarter.

Wells Fargo (WFC) also posted quarterly earnings that beat expectations, while revenue was below Wall Street forecasts. The financial heavyweight reported fourth-quarter earnings of 67 cents a share on revenue of $19.7 billion, compared with earnings of $1.38 a share a year earlier on revenue of $20.9 billion.

BlackRock’s (BLK) fourth-quarter profit fell 23%, while the bank reported net income of $1.26 billion in the same period a year earlier. Citigroup (C) reported net income of $2.5 billion, or $1.16 per diluted share, slightly beating expectations of $2.3 billion, or $1.14 per share. However, profit fell by 21%.

Finally, Goldman Sachs (GS) said its consumer lending business has lost more than $3 billion since 2020. This comes ahead of fourth-quarter earnings, scheduled to be released next week.

Bank stocks were generally lower on Friday morning. The KBW Nasdaq Bank Index (^BKXK), the benchmark for the US banking sector, fell more than 2%.

Friday’s moves came after stocks closed higher on Thursday after investors digested upbeat inflation data that showed prices rose at a slower annual rate in December. Consumer price inflation slowed to 6.5% in December from a year earlier, decelerating from 7.1% in the previous month.

Core CPI excluding volatile food and energy components prices rose 5.7% year-on-year and 0.3% month-on-month. The core CPI reading came in line with Bloomberg economists’ forecasts.

In response to the data, investors grew more confident that the Fed could ease the pace of its tightening at its next policy meeting, which begins Jan. 31.

“As far as the Fed is concerned, the statement raised expectations that they would ease the pace of rate hikes again at the February meeting, moving from 50bp last time to 25bp,” wrote Jim Reid and colleagues at Deutsche Bank in an announcement. -Morning Note Friday.

Central bankers have made it clear that they are not done with interest rate hikes. Fed Chairman Jerome Powell on Tuesday stressed the importance of stable inflation, which can prompt the central bank to take necessary action, even if it is not popular.

Meanwhile, other Fed officials such as Philadelphia Fed President Patrick Harker and Atlanta Fed President Raphael Bostic echoed comments that may suggest the central bank may be open to slowing the pace of rate hikes. .

In other specific stock moves, shares of Tesla (TSLA) fell nearly 5% after the company slashed prices on its Model 3 and Model Y vehicles. Shares of Delta Air Lines (DAL) fell nearly 6% after the The airline forecast current-quarter earnings below expectations amid higher operating costs.

Elsewhere, Bitcoin was up nearly 3% to trade around $18,854.39. The cryptocurrency hit a two-month high after December inflation data on Thursday. On the corporate news front, cryptocurrency exchange Crypto.com is reducing its global workforce by 20% as the company says it is navigating ongoing economic difficulties.

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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