Wall Street on Friday was on track to post a two-week losing streak, as sentiment took a hit after disappointing guidance from heavyweight lender JPMorgan (JPM).
Moreover, crude oil soared after reports that an attack on Israel was imminent by Iran, sending investors to the safety of bonds and the dollar.
The tech-heavy Nasdaq Composite (COMP:IND) led losses among the three major averages, dipping 1.31% to 16,226.96 points in mid-day trade. The benchmark S&P 500 (SP500) retreated 1.12% to 5,140.84 points, while the blue-chip Dow (DJI) lost ground by 0.94% to 38,095.65 points.
All three indexes were set for weekly losses, driven by market participants sharply dialing back their expectations for Federal Reserve interest rate cuts following yet another hotter-than-anticipated consumer inflation report. For the week, the Dow (DJI) was down 2.08%, the S&P (SP500) was down 1.22%, and the Nasdaq (COMP:IND) was down 0.13%.
All 11 S&P sectors were in the red.
Energy fell the least, as WTI crude oil futures (CL1:COM) jumped as much as 3.1% to $87.67/barrel. The advance came amid geopolitical tensions in the Middle East. Major outlets such as The Wall Street Journal and Bloomberg News reported that Israel was bracing for an unprecedented direct attack from Iran by either Friday or Saturday.
The situation in the Middle East had an impact on traders at home, who turned to the relative safety of bonds and the dollar. U.S. Treasury yields were lower as bonds were snapped up. The longer-end 30-year yield (US30Y) was down 6 basis points to 4.62%, while the 10-year yield (US10Y) was down 8 basis points to 4.51%. The shorter-end more rate-sensitive 2-year yield (US2Y) was also down 8 basis points to 4.89%.
See live data on how Treasury yields are doing across the curve at the Seeking Alpha bond page.
Meanwhile, the dollar index (DXY) was higher by 0.66% to 105.97. Speaking of safe haven assets, spot gold prices (XAUUSD:CUR) extended their astonishing rally to yet another record high on Friday.
“The price moves in gold and oil reflect the greater concerns in markets about Iran-Israel tensions. They have been accompanied by lower yields on government bonds and a stronger dollar. Bitcoins and stock are down on the day,” Mohamed El-Erian, chief economic advisor at Allianz, said on X.
“Quite an appreciation in the dollar index so far in April. The two sharp upward moves this week were (caused) by the hotter-than-expected inflation data, and the escalation of Iran-Israel tensions,” El-Erian added.
The spotlight at home was also dominated by the start of the first quarter earnings season, with major banks and financial firms announcing their results.
JPMorgan (JPM) was the biggest name that reported. The number one U.S. bank by assets provided annual net interest income guidance that came in below expectations, sending its shares down more than 5%.
“JPMorgan (JPM) is on pace to end a 104 trading day streak of closes above its 50-DMA. That was tied for the 5th longest streak in the last 30 years,” Bespoke Investment Group noted on X (formerly Twitter).
Also on the docket were Citi (C) and Wells Fargo (WFC). Shares of the former had given up their earlier gains to trade in the red, despite the lender delivering a quarterly top and bottom line beat. Shares of the latter fluctuated after the bank’s quarterly provision for credit losses came in significantly below estimates.
Asset managers BlackRock (BLK) and State Street (STT) saw conflicting reactions to their results. BlackRock (BLK) stock slipped despite the company seeing solid quarterly long-term net inflows and fee growth. State Street (STT) climbed after reporting a record $4.3T in assets under management at the end of the quarter.
Finally, Friday’s economic calendar, though fairly light, had an adverse effect on sentiment. According to data from the University of Michigan, consumer sentiment edged down in April while inflation expectations crept up.