The threat of more war in the Middle East and disappointing earnings reports from U.S. banks triggered a selloff on Wall Street on Friday.
The Dow Jones Industrial Average plunged 475 points to close at $37,983 and is now down about 5% from its all-time high after also breaking the $40,000 barrier that ended March trading. .
The S&P 500 fell 1.5%, or more than 75 points. Meanwhile, the Nasdaq fell 267 points, or 1.6%.
Oil prices soared above $90 a barrel as Iran threatened to launch an attack on Israel as early as this weekend.
JPMorgan Chase & Co., the country’s largest bank by assets, reported a quarterly profit of 6%, but its stock price fell after the outlook for interest income fell short of analysts’ expectations.
Meanwhile, Citigroup’s first-quarter profits fell 27% as it continues to restructure and slim down the bank itself after selling many of its overseas franchises in the wake of the pandemic.
Wells Fargo’s first-quarter profits fell 7% as the company paid more to hold customer deposits amid lower demand from borrowers.
JPMorgan Chief Executive Jamie Dimon reiterated concerns that inflation will continue to weigh on the U.S. economy on a call with analysts after a mixed earnings report.
“Many economic indicators remain strong. But as we look to the future, we remain wary of a number of significant uncertain forces,” Dimon said, adding that wars in Gaza and Ukraine and other It cited geopolitical pressures, high government spending and “sustained inflationary pressures” as “part of the recession.” The world situation is causing anxiety.
According to Dr. Song Won Son, a professor at the same university, the market decline was due to “excessive optimism” on the part of investors who were expecting a rate cut, and “excessive pessimism” that the Fed would maintain interest rates as they are. This is said to be the result of the transition to . He majored in finance and economics at Loyola Marymount University in Los Angeles.
Song said the market rally since October, when the Dow Jones Industrial Average rose more than 12%, was based on expectations for rate cuts.
“The tailwind has gone and it’s become a bit of a headwind,” Song told the Post.
He also noted that if Iran attacks Israel and sparks a regional conflict, oil prices could soar to between $100 and $150 per barrel.
“The stock market was overvalued to begin with,” he said. “Now they have turned around and are worried about the future.”
Earlier this week, the federal government released data showing inflation rose 3.5% year-on-year in March, higher than the 3.4% expected by economists.
The persistence of inflation has dampened Wall Street’s expectations that the Federal Reserve will cut interest rates at least three times this year.
There is now a new consensus among investors that a rate cut will occur as early as September.
Initial expectations were that the Fed would start cutting interest rates in June.
with post wire
