By Yasin Ebrahim
Investing.com -- The Dow ended well above session lows Thursday, as Federal Reserve officials wrestled back control of the rate hike narrative, cooling bets on a 1% rate hike after Wall Street banks kicked off the quarterly earnings season with gloomy results.
The Dow Jones Industrial Average fell 0.5%, or 142 points, the Nasdaq was up 0.03%, and the S&P 500 fell 0.3%. All three major averages were down more than 2% at the lows of the session.
Technology stocks led the move off the lows for the broader market as Treasury yields retreated after Fed governor Christopher Waller played down the prospect of the central bank 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 nearly 3% 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.
Financials were pushed lower by a slide in banking stocks following disappointing quarterly results from Wall Street banks.
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 nearly 1% and 3%, respectively.
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 2%, 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.