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US stocks tumble on inflation data, weak bank results

Wall Street stocks slumped early Thursday following another gloomy inflation report and disappointing bank results that set a gloomy tone at the start of the second-quarter corporate earnings season.

About 25 minutes into trading, the Dow Jones Industrial Average was down 1.7 percent at 30,266.17 after earlier tumbling two percent.

The broad-based S&P 500 fell 1.6 percent to 3,741.71, while the tech-rich Nasdaq Composite Index shed 1.4 percent to 11,085.57.

A day after data showing the biggest jump in consumer prices in more than four decades, the Labor Department reported that US wholesale prices rose 1.1 percent, topping expectations, on a 10 percent surge in energy prices, more than double the increase in May.

Meanwhile, results from JPMorgan Chase lagged estimates as the banking giant reported a 28 percent drop in quarterly earnings and set aside additional funds in case of bad loans.

JPMorgan executives stressed that US consumers remained relatively well off if there is a recession, but warned of economic headwinds that “are very likely” to dent growth.

Shares of JPMorgan fell 4.4 percent. Morgan Stanley, which also missed estimates, dropped 2.6 percent.

The weak bank results underscore “that now we’re entering the process of the very real possibility of an earnings recession,” said Adam Sarhan of 50 Park Investments, referring to the possibility of two consecutive quarters of lower profits compared to the year-ago period.

“That could lead to lower (stock) prices,” Sarhan said. “Because first thing slowed down on Main Street, and then you see earnings slow down on Wall Street.”

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AFP

Agence France-Presse (AFP) is a French state-owned international news agency based in Paris. It is the world's oldest news agency, having been founded in 1835 as Havas.




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