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Shares of JPMorgan were 3.3% lower in premarket trading after it
reported a fall in second-quarter profit, hit by higher
provisions to cover potential losses.
Jamie Dimon, chief executive of the largest U.S. bank, flagged a
number of concerns including geopolitical tension, high
inflation and the "never-before-seen" quantitative tightening as
threats to global economic growth.
"As far as the things that you do not want to see, you have got
pretty much every one of them, missing top and bottom line,
cutting the buybacks and increasing credit reserves are all
things consistent with battening down the hatches for a
recession versus a short-term blip in demand in the first half,"
said Thomas Hayes, managing member at Great Hill Capital Llc in
New York.
"The market does not like it and rightfully so."
Morgan Stanley fell 2.6% after reporting a drop in quarterly
profit as dealmaking slumped amid soaring market volatility.
Shares of other banks Wells Fargo & Co, Goldman Sachs Group Inc
and Citigroup fell between 1.8% and 2.3%.
Recession fears have roiled financial markets this year as
central banks across the world move to aggressively raise
borrowing costs to curb sky-high inflation, pushing Wall Street
to its worst first-half performance in decades.
As of last Friday, analysts saw aggregate annual S&P earnings
growth of 5.7% for the April-to-June period, down from the 6.8%
forecast at the beginning of the quarter, according to Refinitiv.
"We expect much of the upcoming reporting season to represent an
earnings 'confession' period for chief executive officers as
guidance to analysts will likely be adjusted noticeably to the
downside," Wells Fargo's senior global market strategist Scott
Wren wrote in a note.
After a robust jobs report last week cemented the case for a
75-basis-point rate hike in July, investors were rattled by
hotter-than-expected consumer prices data on Wednesday that
pushed traders to bet on an ever bigger full percentage point
interest rate hike later this month.
Investors will now be watching the Labor Department's report on
the producer prices index for final demand, which is expected to
show a 10.7% rise in the twelve months through June after an
increase of 10.8% in May.
The report is due at 8:30 am ET (1230 GMT).
At 7:06 a.m. ET, Dow e-minis were down 416 points, or 1.35%, S&P
500 e-minis were down 48.5 points, or 1.27%, and Nasdaq 100
e-minis were down 103.5 points, or 0.88%.
(Reporting by Amruta Khandekar and Bansari Mayur Kamdar in
Bengaluru; additional reporting by Medha Singh; Editing by
Aditya Soni)
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