Stocks tumbled Thursday as big bank earnings season commenced and traders assessed the possibility of even tighter U.S. monetary policy on the back of June’s hot inflation report.
The Dow Jones Industrial Average shed 603 points, or 1.96%, while the S&P 500 dropped 1.89%. The Nasdaq Composite tumbled 1.73%.
Traders got another reality check Thursday, with JPMorgan Chase & Co. temporarily halting buybacks as earnings fell short of estimates, and Morgan Stanley announcing a plunge in investment-banking revenues.
Both shares slumped, dragging the S&P 500 toward its fifth straight day of losses. Another inflation reading came in hotter than expected, bolstering market wagers on a full-point Fed hike in July.
Jamie Dimon, chief executive of the largest U.S. bank, flagged a number of concerns including geopolitical tension, high inflation and the “never-before-seen” quantitative tightening as threats to global economic growth.
Recession fears have roiled financial markets this year as central banks across the world move to aggressively raise borrowing costs to curb sky-high inflation, pushing Wall Street to its worst first-half performance in decades.
After a robust jobs report last week cemented the case for a 75-basis-point rate hike in July, investors were rattled by hotter-than-expected consumer prices data on Wednesday that pushed traders to bet on an ever bigger full percentage point interest rate hike later this month.
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