Stocks opened in negative territory Friday and stayed there through the close, putting a dismal cap on a down week for the main indexes. Today’s slide came courtesy of disappointing forecasts from several big banks, though geopolitical risks ramped up the selling pressure.
Ahead of the open, several of the country’s biggest financial institutions kicked off first-quarter earnings season. Front and center was JPMorgan Chase (JPM), which disclosed Q1 earnings of $4.44 per share on $42.6 billion in revenue, both figures higher than analysts were expecting.
However, the blue chip stock plunged 6.5%, losing $36 billion in market value along the way, on a disappointing forecast. Specifically, JPM said it expects net interest income (NII) – a key profitability measure for banks that shows the difference between revenue made on interest-bearing accounts like loans and the costs paid for those assets – to be $90 billion for fiscal 2024, unchanged from its previous forecast.
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Nevertheless, CFRA Research analyst Kenneth Leon maintained a Buy rating on the Dow Jones stock. Leon says the NII guidance is conservative, and expects “current [interest] rates and a healthy U.S. economy [to] support higher loan volume and the impact on net interest income.”
Both Citigroup (C, -1.7%) and Wells Fargo (WFC, -0.4%) reported top- and bottom-line beats for their first quarters, too, but the financial stocks closed lower today.
Intel, AMD slide on China news
In non-earnings news, semiconductor stocks Intel (INTC, -5.2%) and Advanced Micro Devices (AMD, -4.2%) both fell after The Wall Street Journal said China gave the country’s biggest telecom carriers until 2027 to begin phasing out core processors made by foreign companies.
CFRA Research analyst Angelo Zino maintained a Positive outlook on the semiconductor industry following the unconfirmed WSJ reports. “This should come as a surprise to nobody, and we would anticipate more headline news in the future surrounding China’s de-emphasis on U.S.-designed chips across all industries,” Zino wrote in a note.
Rising geopolitical risks boost crude oil
It wasn’t just negative earnings reactions and weakness in chip stocks that weighed on the stock market today, though. Media reports suggesting that Iran is preparing a direct attack on Israel at some point over the next few days amplified selling across the equities market.
Indeed, the Dow Jones Industrial Average slid 1.2% to 37,983, the S&P 500 fell 1.5% to 5,123, and the Nasdaq Composite plunged 1.6% to 16,175. All three closed lower for the week.
While stocks sold off on the rising geopolitical risks, crude oil futures hit a six-month high in intraday trading before settling up 0.8% at $85.66 per barrel.
