United States benchmark averages dropped on Tuesday (Wednesday AEDT) as banking stocks fell, despite better-than-expected inflation data.
The S&P 500 index fell 0.2% to 9,963.74, the Dow Jones Industrial Average lost 0.8% to 49,191.99 and the Nasdaq Composite was down 0.1% to 23,709.87.
Banking stocks continued yesterday’s slide, with the S&P’s financials index down 1.8%.
Major banks and financial services had declined on Monday (Tuesday AEDT) after U.S. President Donald Trump called for a one-year 10% cap on credit card interest rates. Shares in Bank of America, Citigroup, and Goldman Sachs fell 1.2% today while Visa dropped 4.5%.
JPMorgan Chase shares were down 4.2%, despite the company beating earnings and revenue estimates in its fourth quarter earnings today. Investment banking fees dipped to US$2.3 billion, however, below estimates.
The bank’s Chief Financial Officer Jeremy Barnum also indicated that the industry would be open to a lawsuit to block Trump’s proposed interest rate cap, saying on an earnings call that “everything’s on the table”.
Bank of America, Citigroup, and Wells Fargo will report earnings on Wednesday (Thursday AEDT).
Stocks were also supported earlier in the day by better-than-expected U.S. consumer price index data for December. Traders project a 70% probability of interest rate cuts by the Federal Reserve’s June meeting, per CME FedWatch.
Annual headline inflation was 2.7%, in line with Dow Jones forecasts. Annual core inflation was 2.6%, below estimates of 2.8%.
“I expect inflation to resume its convergence toward our 2% target over the course of this year. Today’s inflation reading was encouraging in that respect,” St. Louis Fed President Alberto Musalem said.
Two-year bond yields were down 0.01% to 3.537%, and 10-year yields also slipped 0.1% to 4.181%.
