The larger banks were likely not significantly affected by the recent regional banking turmoil, and may have even benefited from it. Most banks displ
The larger banks were likely not significantly affected by the recent regional banking turmoil, and may have even benefited from it. Most banks displayed robust and healthy balance sheets, indicating that the crisis in regional banking is not systemic.
On Friday, the blue chip Dow Jones Industrial Average settled at 33886.47, down 143.42 or -0.42%. The benchmark S&P 500 Index closed at 4137.64, down 8.58 or -0.21% and the tech-heavy NASDAQ finished at 12123.47, down 42.81 or -0.35%.
JPMorgan Chase Leads Banking Sector Surge
Real estate was the worst-performing sector among the 11 major sectors of the S&P 500, as seven sectors ended the session lower. Conversely, financials saw the biggest percentage increase, rising 1.1%.
Within the S&P 500 banking sector, JPMorgan Chase surged 7.6%, its largest one-day percentage gain since Nov. 9, 2020, while Citigroup advanced 4.8%. Wells Fargo, however, edged 0.1% lower. All three banks beat earnings expectations, benefiting from higher interest rates and reduced fears of stress in the banking system.
BlackRock Inc also beat quarterly profit expectations, leading to a 3.1% rise in its share price. On the other hand, Boeing Co fell 5.6% after suspending deliveries of some 737 MAXs due to a supplier quality issue attributed to Spirit AeroSystems, whose shares dropped 20.7%. Luxury electric automaker Lucid Group Inc’s disappointing Q1 production and delivery numbers caused its share price to drop 6.3%.
Fed Rate Hike Likely Despite Mixed Data
Despite mixed economic data including retail sales and consumer sentiment, stronger-than-expected industrial production and capacity utilization reinforced expectations that the Federal Reserve will raise interest rates by 25 basis points at next month’s policy meeting. These figures suggest that the economy still has some momentum, which could allow the Fed to continue its rate hike policy into June.
Atlanta Fed President Raphael Bostic supported this view. He stated that a 25 basis point hike could enable the Fed to conclude its tightening cycle. However, Chicago Fed President Austan Goolsbee advised the central bank to exercise caution.
Currently, financial markets anticipate a 74% probability of a rate hike, according to CME’s FedWatch tool.
S&P 500 Could See 4.8% Earnings Decline
Refinitiv reports that analysts have adjusted their expectations for the S&P 500’s aggregate earnings, forecasting a 4.8% decline from the previous year. This marks a shift from the 1.4% year-on-year increase projected at the start of the quarter.
First-quarter earnings season will be in full swing next week, featuring highly anticipated results from companies such as Goldman Sachs Group Inc, Morgan Stanley (MS.N), Bank of America Corp, Netflix Inc, as well as several regional banks and industrial firms.
For a look at all of today’s economic events, check out our economic calendar.
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