FX.co ★ U.S. Stocks Pulling Back Sharply As JPMorgan Chase Disappoints

Following a sharp rebound in the prior session, Friday's trading saw stocks experience a significant downturn. All the major averages sank firmly into the red, with the Dow plummeting to its lowest intraday level in two months.

Just off the day's worst levels, the Dow stood 352.19 points (0.9%) down at 38,106.89, while the Nasdaq was 217.48 points (1.3%) lower at 16,224.72. The S&P 500 also posted a drop, shedding 52.83 points (1.0%) to 5,146.23.

Markets felt the brunt of a 5.8% plunge by JPMorgan Chase (JPM), which drew back to its lowest intraday level in over a month following the release of better than expected first quarter results, but disappointing guidance for net interest income, an essential profit indicator. Likewise, Citigroup’s shares fell despite surpassing analyst estimates in its first quarter results.

Persistent inflation concerns also added pressure to the markets. The Labor Department reported that import prices in March rose by 0.4%, slightly more than the 0.3% expected. Compared to the previous year, import prices had risen by 0.4%, marking the first year-on-year increase since January 2023.

Meanwhile, export prices increased by 0.3% in March, as anticipated, down from a revised 0.7% increase in February. Compared to March of the preceding year, export prices had reduced by 1.4%.

Additional market downturn was propelled by the University of Michigan's preliminary data showing a more significant than expected drop in consumer sentiment in April and a rise in inflation expectations.

In sector news, airline stocks took a significant hit, with the NYSE Arca Airline Index falling by 3.9% to a two-month intraday low. Also, evident weakness was observed in semiconductor and computer hardware stocks, evidenced by a 2.9% dip in the Philadelphia Semiconductor Index and a 2.3% slump in the NYSE Arca Computer Hardware Index. Networking, software and banking sectors also recorded notable losses; however, gold stocks scaled up amid a stark increase in the precious metal price.

On the global front, most of the Asia-Pacific region's stock markets faced declines during Friday's trading. Hong Kong's Hang Seng Index sank by 2.2% and China's Shanghai Composite Index dropped by 0.5%, while Japan's Nikkei 225 Index managed a slight 0.2% rise.

Meanwhile, Europe's significant markets were mixed. While the UK's FTSE 100 Index went up by 1.1%, the German DAX Index and the French CAC 40 Index both declined by 0.2%.

In the bond market, treasuries turned around after a slight downturn in the previous session. Consequently, the benchmark ten-year note's yield, which moves inversely to its price, fell by 8.7 basis points to 4.489%.