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S&P 500 Off Lows as Bets on Mega Rate Hike Ease; Banks Glum on Earnings Miss

Published 07/14/2022, 01:53 PM
Updated 07/14/2022, 03:20 PM
© Reuters.

By Yasin Ebrahim

Investing.com -- The S&P 500 cut losses Thursday, as Federal Reserve officials downplayed the prospect of a 1% rate hike, though disappointing quarterly results from major Wall Street banks fueled recession fears and soured investor sentiment.

The S&P 500 fell 0.3%, the Dow Jones Industrial Average fell 0.5%, or 164 points, the Nasdaq was down 0.03%. All three major averages were down more than 2% at the lows of the session. 

JPMorgan (NYSE:JPM) said it would temporarily pause share buybacks after reporting second-quarter earnings that fell short of estimates, sending its shares more than 3% lower.

The Wall Street bank also set aside more money than expected for potential loan losses, raising concerns about the strength of the U.S. consumer.

Morgan Stanley (NYSE:MS) also reported a miss on second-quarter earnings, driven by weaker performance in its investment banking business. Its shares recovered to trade flat after falling more than 2%.

Wells Fargo (NYSE:WFC) and Citigroup (NYSE:C), which both report on Friday, were down 1% and 3%, respectively. 

Technology stocks turned positive as Treasury yields retreated after Federal Reserve governor Christopher Waller played down the prospect of the Fed rolling out an unprecedented 1% rate hike later this month.  

“You don't want to overdo rate hikes,” Waller said Thursday, adding that the market had got "ahead of themselves" on pricing a 100 basis point hike, though he didn’t rule out the prospect of a larger hike. 

“If that data come in materially stronger than expected it would make me lean towards a larger hike at the July meeting,” he added.

St. Louis Federal Reserve President James Bullard reportedly also said he would favor a 75 basis point hike at the July meeting.

The odds of a 1% rate hike fell to about 44% from 80% a day earlier, according to Investing.com’s Fed Rate Monitor Tool.

Taiwan Semiconductor Manufacturing (NYSE:TSM) gained 2% to help chip stocks erase losses after the chip bellwether reported quarterly results that beat on both the top and bottom lines.

The chipmaker also raised its full-year revenue forecast, helping to cool concerns somewhat about the chip demand outlook following Micron's gloomy outlook a few weeks ago.

Energy was also one of the major decliners as oil prices added to recent losses on concerns that a global recession will dent demand for energy.

APA (NASDAQ:APA), EOG Resources (NYSE:EOG), and Coterra Energy (NYSE:CTRA), each down more than 3%, led the move lower in energy.

In other news, Cisco (NASDAQ:CSCO) fell nearly 1% as JPMorgan downgraded the stock to neutral from outperform on worries that “supply and spending hesitations” will weigh on demand.

Latest comments

Walmart becomes more like old Kmart. Are Kmart stores still around somewhere?
Maybe Amazon should acquire Target and name it Amaget
"US Stocks Recover in Late Trade," the most prolific headline in internet news history.  Another miraculous reversal of losses.  The US stock market is a fraudulent, criminally manipulated farce.
And the market fell in late trade yesterday.  Stupid perma-bears expect the market to fall every minute.
And the market fell in late trade yesterday.  Only an idiot expects the market to fall every minute.
Rate hiking is a good thing for retirees depending on CDs and annuities investments. So, some rate hiking is long overdue anyway.
No good for them if they're already in long-term bonds and prices are rising against their fixed incomes.  Good for them that the Democrats in gov't have been raising the checks they get from the gov't.
True. A healthy 5% on a CD would be a good thing for a lot of people.
Maybe Walmart acquires Target and names it Walgetmart to dominate Amazon.
Its called Tarmart! Lol
Or maybe Tarmartzone
how does this happen everyday. this is pure manipulation. fed must be pumping markets. after hours drop they pick up stocks at a lower price then pump up market
Market is definitely rigged.
Trolls are also rigged.
These articles always focus on the symptoms...Inflation isn't going away and will only get worse. Rate Hike easing should also be terrible news for stocks and Americans
Russian withdrawal will lead to inflation & rate hikes easing.  These articles here are financial articles and tend not to delve into military speculations.
Target is far better than Walmart in same day deliverty competition and website quality.
Feels like Deja Vu everyday… makes you wonder..
Situation in Ukraine hasn't changed much in a while.
bullish, futures rallied
too much Puts in the money will worsen the drop,  The big boys must drive up price to close high enough to make PUT expires worthless.  After close,  and next day the stock will drop and again repeat process.  PUTS option can cause a big self fuelling crash once in the money.
An important factor is are puts being rolled to lower strikes further out or not.
Another 600 point loss magically vanishes into thin air, while 600 point "rallies" walk a tightrope through the close.  Pathetic, criminally manipulated, FRAUDULENT JOKE.
Its 100% ken griffin at Citadel. They manipulate “make the market”
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