Wall Street Concludes Sharply Lower Amid Mixed Earnings, Persistent Inflation, and Geopolitical Concerns

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Friday saw a significant sell-off in U.S. stocks, driven by disappointing results from major banks, concerns about inflation, evolving Federal Reserve policy expectations, and geopolitical tensions. All three major indexes experienced losses of more than 1%, resulting in weekly losses for each index.

The S&P 500 index recorded its largest weekly percentage decline since January, while the Dow Jones Industrial Average marked its steepest weekly loss since March 2023.

Investors closely monitored the kickoff of first-quarter earnings season, with JPMorgan Chase & Co, Wells Fargo & Co, and Citigroup releasing their financial results. JPMorgan reported a 6% increase in profit, but its net interest income forecast fell short of expectations, leading to a 6.5% decline in its shares. Wells Fargo’s profits fell 7%, and Citigroup posted a loss after accounting for employee severance and deposit insurance, causing its stock to dip 1.7%.

Economic data throughout the week, particularly the Consumer Price Index report released on Wednesday, indicated that inflation might persist longer than previously anticipated. This prompted investors to reassess their expectations regarding the timing and magnitude of potential rate cuts by the Federal Reserve. Some analysts suggested that the Fed might refrain from cutting rates this year, although they did not expect a hike either.

Geopolitical tensions, such as Iran’s threat of retaliation against Israel for an April 1 airstrike, added to market uncertainty and contributed to the sell-off.

The major indexes all closed in the red, with the materials sector suffering the most significant percentage loss. Advanced Micro Devices and Intel both experienced declines following reports that Chinese officials urged the country’s largest telecom firm to phase out foreign chips by 2027. U.S. Steel slid 2.1% after shareholders approved a proposed merger with Nippon Steel Corporation.

Declining issues outnumbered advancers on both the NYSE and Nasdaq, with overall trading volume higher than the 20-day average.

In summary, Friday’s sell-off was driven by a combination of factors, including earnings disappointments, inflation concerns, evolving Fed policy expectations, and geopolitical tensions, resulting in significant losses across the major U.S. stock indexes.