U.S. stocks fell on Friday after disappointing results from several of the country’s major banks raised uncertainty about the strength of the upcoming earnings season.
U.S. stock markets fell after big banks disappointed with their quarterly results.
The major banks presented their results
Shares of JPMorgan Chase (JPM) fell nearly 4% after the banking giant estimated full-year earnings from interest payments below forecasts, while the industry braced for anxiously awaited interest rate cuts.
Wells Fargo (WFC) also fell about 0.6% despite beating revenue estimates, as the lender reported lower-than-estimated net interest income figures.
The health of the banking industry often measures the economy’s strength, and uncertainty about Federal Reserve interest rate expectations looms over this year’s first-quarter earnings season.
Analysts estimate that the S&P 500 companies as a whole will post earnings growth of close to 5% in the first quarter compared to last year, according to LSEG data, which is a sharp drop from the 10.1% growth posted in the fourth quarter of last year.
Meanwhile, shares of Roku (ROKU) fell about 1.5% after the company announced on Friday a second cyberattack affecting approximately 576,000 accounts, following an earlier breach of 15,000 user accounts this year.
Fed in the spotlight
The main economic release on Friday was the Michigan consumer confidence index for April, but almost all attention was focused on Fed speakers as investors were on the lookout for more information about the Fed’s future interest rate plans.
This week’s higher-than-expected CPI release has led investors to dismiss the possibility of a June rate cut, particularly following the strong monthly payrolls report. The next potential date for a rate cut is tentatively set for September.
Oil rises on geopolitical tensions
Crude oil prices rose on Friday due to elevated geopolitical risks in the oil-rich Middle East, despite being on track for weekly losses amid concerns about U.S. monetary policy.
According to U.S. officials, a brief Iranian attack on Israel is expected in response to an alleged Israeli airstrike on a senior Iranian military commander in Damascus earlier this week.
Moreover, given that Iran is the third-largest producer in the Organization of Petroleum Exporting Countries, its involvement in the Hamas-Israel conflict in Gaza could jeopardize the region’s crude oil supply.
Geopolitical tensions have overshadowed the International Energy Agency’s recent forecast, which reduces this year’s oil demand growth by about 100,000 barrels a day to 1.2 million barrels a day, as stated in their latest monthly report released on Friday.
The global energy watchdog stated that it expects oil demand growth to slow further to 1.1 million barrels a day next year, following the stabilization of conditions after the crisis that began in December 2019.
