The S&P 500 declined on Tuesday as investors sold JPMorgan even after it reported better-than-expected results and struggled with fluctuation due to a barrage of President Donald Trump’s ideas that have been floated over the last few days.
The broad-based index dropped 0.19 percent and closed at 6,963.74, while the Dow Jones Industrial Average shed 398.21 points, or 0.8 percent, and ended at 49,191.99. The Nasdaq Composite declined by 0.1 percent and ended at 23,709.87.
JPMorgan fell 4.2 percent, despite the company recording better-than-expected and bottom-line results in the fourth quarter. Although the companywide and equities trading revenue improved in the quarter, investment banking fees declined and were below expectations.
CFO of the company, Jeremy Barnum, also indicated that the banking sector might resist Trump requesting 10 percent interest rate on credit cards, to be imposed for one year, which he announced late Friday.
Goldman Sachs trailed behind JPMorgan with a fall of over 1 percent. Other financial shares, including Mastercard and Visa, declined by 3.8 percent and 4.5 percent, respectively, making them some of the worst-performing shares of the day.
Therefore, the State Street Financial Select Sector SPDR ETF (XLF) and Invesco KBW Bank ETF (KBWB) were also being pressurized.
The credit card price controls demanded by Trump followed a series of other calls made by the president last week, such as that defense companies should not be allowed to pay dividends or stock buybacks, and that large institutional investors should not be allowed to purchase more single-family houses.
Chief Investment Officer at Orion, Tim Holland, said, “There are real questions as to whether or not you know those changes can be affected out of the executive branch without Congressional involvement or approval. The path forward isn’t necessarily clear.”
Trump further stated that later on Monday evening, Microsoft will declare changes that will see Americans not be facing increased utility expenses due to its datacenter construction projects. Stocks closed Tuesday with an over 1 percent decline.
Meanwhile, oil prices surged when Trump canceled every meeting with Iran, one of the leading OPEC producers, and informed protesters that “help is on its way.”
This is only a day following his declaration that any nation that conducts business with Iran will be subjected to a 25 percent tariff on any and all business transacted with the U.S.
Stocks had gotten a slight boost earlier Tuesday, with the December consumer price index report registering core CPI, or the index without food and energy, increasing 0.2 percent on the month, 2.6 percent on the year, compared with 0.3 percent and 2.8 percent, respectively, as estimated by the economists surveyed by Dow Jones.
The monthly headline inflation rate rose in December by 0.3 percent, reaching an annual rate of 2.7 percent. Both characters corresponded to the prognoses of Dow Jones.
The data of CPI was released several days after the December jobs report indicated a slightly weaker and yet stable labor market, which probably prompted the Fed not to reduce its interest rates immediately during their first meeting of the year later this month.
The CME FedWatch tool shows that Fed funds futures are pricing two quarter-point cuts this year, the first beginning in June.
Wall Street is expecting a record-setting year when both the S&P 500 and Dow Industrials record-closing highs in the eyes of investors who disregarded news of the Department of Justice criminal investigation of Federal Reserve Chair Jerome Powell. The Russell 2000 index of small company shares also hit an all-time high.
Trump again bashed Powell on Tuesday, labeling him “incompetent” or “crooked” as uncertainty lingers about central bank independence.
