(Reuters) – The New York Stock Exchange opened in the red on Thursday after the release of quarterly results from two major U.S. banks, JPMorgan and Morgan Stanley, hit by falling profits amid growing fears of a recession in the USA.
About ten minutes after the first exchanges, the Dow Jones index lost 586.9 points, or 1.91%, to 30,185.89 points and the wider Standard & Poor’s 500 fell 1.82% to 3,732, 45 dots.
The Nasdaq Composite lost 1.69%, or 189.66 points, to 11,057.92.
JPMorgan on Thursday reported a 28% drop in second-quarter profit, which came in below consensus, due in part to higher provisions as its chief executive Jamie Dimon warned that geopolitical tensions, the high inflation and the loss of consumer confidence “were very likely to have negative consequences for the global economy at some point”.
Morgan Stanley also missed – for the first time in nine quarters – consensus earnings due to a slump in trading amid high market volatility that weighed on its investment banking business.
In the wake of JPMorgan and Morgan Stanley, which lost 4.38% and 2.84% respectively, Wells Fargo, Goldman Sachs, Citigroup and Bank of America fell from 3% to 3.5%, while the sector index of banks drops 3.46%.
“All the things you don’t want to see, you pretty much get them all: lower-than-expected numbers, lower share buybacks and higher credit reserves all signal a recession rather than a recession. ‘a one-time air pocket’, comments Thomas Hayes, president of Great Hill Capital.
“The market doesn’t like it and rightly so,” he adds.
As for the US economic indicators, after the publication on Wednesday of unexpected consumer price data in June, producer prices also came out above expectations on Thursday, the index having increased last month by 1.1% and 11.3% at an annual rate, a sign of persistent inflation.
Weekly jobless claims in the United States, for their part, also rose more than expected last week to 244,000.
(Writing by Valentine Baldassari, editing by Kate Entringer)