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The US stock market ends trading with mixed results on major indices against the background of disappointing quarterly results of the largest banking corporations.
As investors weighed in on the possibility of more aggressiveness from the US Federal Reserve, the Dow Jones shed 0.46% and the broad market benchmark S&P 500 shed 0.3%. Nasdaq Composite, the main indicator of the state of the technology sector, still managed to reach a symbolic plus by three hundredths of a percent.
Despite the negative values for a number of indices, the results of trading on Thursday, July 14, can be considered quite satisfactory, since the actual closing happened quite far from the session lows. At the moment, the Dow Jones lost more than 600 points, while the composite Nasdaq and S&P 500 were down more than 2%.
The leaders of Dow Jones are the largest US aircraft manufacturer Boeing (BA) +2.22%, which showed excellent production figures for June the day before, as well as Apple (AAPL) +2.05% and Walmart (WMT) +1.95%. The financial sector, led by Travelers (TRV) -4.67%, was the leader of the decline.
JPMorgan failed to bail out Dow Jones
Stock JPMorgan Chase (JPM) fell 3.49%, dragging Goldman Sachs (GS) -2.95% and American Express (AXP) -2.09%. America’s largest banking corporation by assets reported earnings of $2.76 per share versus $2.88 expected by analysts, as well as a decrease in revenue, which amounted to $31.63 billion against the background of a preliminary consensus of $31.95 billion.
JPMorgan’s profit was $8.65 billion, down 28% from the same period last year. The Bank was forced to significantly increase the provisioning of funds for potential write-offs on bad credit obligations of customers, and also abandoned the planned buyback of shares from the market.
Moreover, JPM CEO Jamie Dimon continued to take an extremely cautious position regarding the further development of not only the economic situation in the United States, but also the global economy as a whole.
Jamie Dimon keeps waiting for the hurricane
He identified a whole set of negative factors that will remain the driving force in the current situation. He cites high geopolitical tensions, record inflation, declining consumer confidence and apparent uncertainty about what rates should be, chief among them.
“The tightening of monetary policy and its impact on global liquidity, coupled with the war in Ukraine, which has already changed global energy and food prices, is likely to have the most negative consequences for the global economy,” said JPMorgan Chase CEO.
Back in the spring of this year, JPM was in the forefront of banking companies that began to reserve funds to cover losses. In April 2022, JPM allocated more than $900 million for these purposes, and added another $400 in the current quarter. This fits into the so-called cautious strategy voiced by the bank. At the very beginning of June, Jamie Dimon urged to prepare for the worst, and called the situation in the US economy “an approaching hurricane.”
Do not believe! JPMorgan sees no signs of recession
During the conference call on the results of the second quarter, when asked to comment and update his forecast, Mr. Dimon said that he had not changed. Moreover, he expressed an increase in his misgivings, some of which were actually beginning to surface. In light of the foregoing, it is extremely interesting that JPMorgan management commented that there are no signs that the US economy is entering a recession, and Dimon is extremely positive about the labor market, focusing on the fact that the United States economy added 372,000 jobs last month alone. .
Closing the topic of JPM in this review, we would like to add that the bank’s shares fell by almost 30% this year, which is significantly worse than the industry benchmark KBW Bank Index, which lost less than 20%.
Investors were also disappointed by the results of Morgan Stanley (MS), although its shares did not fall as clearly as the rest of the financial sector, losing only 0.39%. MS explained the weak financial results of the second quarter by falling income from investment banking. The New York-based company’s earnings fell nearly 30% to $2.5 billion, or $1.39 per share, against a consensus expectation of $1.53.
As far as corporate earnings are concerned, Warren Buffett’s favorite bank Wells Fargo (WFC) and Citigroup (C) will release their financial results on Friday, while Bank of America (BAC) and Goldman Sachs (GS) will do so next Friday. week.
In conclusion, we note the continuation of the tense situation on the oil market, which has updated the minimum March values. West Texas WTI “dived” below $91 per barrel, while North Sea Brent was testing the $95 price tag at that moment. Traders leveled the intraday fall closer to the evening trading period. At the moment, black gold quotes are trading around $96 and $100, respectively. Shares of the only oil representative in the Dow Jones Industrial index Chevron (CVX) fell 1.49%.