Stocks Fall After Bank Results; Bond Yields Climb: Markets Wrap

(Bloomberg) — Stocks fell after disappointing results from two of Wall Street’s biggest banks and weaker-than-forecast economic reports.

The S&P 500 was poised for its second straight week of losses amid intense volatility driven by expectations of higher interest rates. JPMorgan Chase & Co. and Citigroup Inc. tumbled after posting a steeper-than-expected drop in trading revenues, while Wells Fargo & Co. climbed as it expects a key measure of lending to pick up. The tech-heavy Nasdaq 100 outperformed major benchmarks after falling to its lowest since October. Treasury yields climbed, while the dollar fluctuated.

U.S. consumer sentiment declined in early January by more than forecast amid mounting concerns about soaring inflation and the fast-spreading omicron coronavirus variant. Retail sales sank in December by the most in 10 months, suggesting the fastest inflation in decades is taking a greater toll on consumers. Growth in U.S. factory output unexpectedly declined amid persistent struggles with material and labor shortages.

The U.S. economy will take an early hit this year from the omicron variant of coronavirus — but the damage shouldn’t last beyond the first quarter, according to Bloomberg’s latest monthly survey of forecasters. The Federal Reserve is increasingly expected to raise rates from zero at its meeting in March as it seeks to rein in price pressures.

“The Fed shifting into inflation-fighting, particularly from the currently depressed level of real rates, is a paradigm shift that will continue to influence sector, industry, and factor returns over the coming months,” wrote Dennis DeBusschere, founder of 22V Research.

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

The S&P 500 fell 0.4% as of 10:30 a.m. New York time
The Nasdaq 100 was little changed
The Dow Jones Industrial Average fell 0.8%
The Stoxx Europe 600 fell 0.8%
The MSCI World index fell 0.6%

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro fell 0.2% to $1.1429
The British pound fell 0.2% to $1.3681
The Japanese yen rose 0.3% to 113.81 per dollar

Bonds

The yield on 10-year Treasuries advanced five basis points to 1.75%
Germany’s 10-year yield advanced four basis points to -0.05%
Britain’s 10-year yield advanced three basis points to 1.14%

Commodities

West Texas Intermediate crude rose 1.1% to $83.01 a barrel
Gold futures were little changed

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