US stocks dwindled in early trade on Friday, as Wall Street’s largest banks reported earnings and investors processed additional inflation projections.
The Dow Jones Industrial Average decreased by 0.3%, while the S&P 500 dropped by almost 1%. The heavily tech-focused Nasdaq Composite decreased by 1.3%.
The University of Michigan consumer poll revealed rising inflation expectations, the highest level in six months, which caused stocks to fall dramatically.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, stated in a note that “the jump in inflation expectations probably is a response to the increase in petrol prices in recent weeks, in which case it won’t persist.” “Furthermore, if previous experience is any indication, this early reading may be altered by as much as +/-0.2pp. However, given how intently policymakers seem to follow the metric, this comeback, which is reversing the decrease last month, does not look good in light of the September inflation statistics.”
Wall Street was attentive Friday as major financial institutions like JPMorgan Chase, Morgan Stanley, and Citigroup reported their third-quarter earnings.
Before the opening bell on Friday, JPMorgan Chase began reporting earnings. After the bank’s quarterly reports beat Wall Street expectations for earnings and revenue, its stock price increased by 2%.
Wells Fargo reported third-quarter revenue that was higher than anticipated, offsetting a profit shortfall. Shares increased by 3%. Shares of Morgan Stanley dropped about 2% in premarket trade after the company disclosed a decline in third-quarter profit. On Friday, Citigroup announced a 25% decline in third-quarter profit due to subpar investment banking activity.
On Friday morning, two major deals were announced: Kroger will pay $24.6 billion to acquire rival Albertsons, and Beyond Meat would cut 19% of its global staff following a challenging third quarter.
In September, despite high inflation and rising interest rates, consumer expenditure on goods and services remained unchanged. Retail sales increased by 0.1%. Inflation is not accounted for in the calculation. Bloomberg questioned economists who predicted a 0.2% increase in retail sales.
