On Friday, April 12th, Wall Street experienced a significant decline, with major stock indices recording substantial losses. The S&P 500 had its worst day since January, plunging 1.46%, while the Dow Jones Industrial Average tumbled 475 points (-1.24%), and the Nasdaq Composite Index slid 1.62%. The negative sentiment was heavily influenced by earnings reports from major banks and escalating tensions in the Middle East. 

Banking shares took a hit after JPMorgan Chase (JPM.US), Wells Fargo (WFC.US), and Citigroup (C.US) disclosed that high interest rates had negatively impacted their net interest income. JPMorgan Chase’s stock fell 6.3% despite beating earnings and revenue expectations, while Wells Fargo’s dropped 0.3% on a 7% decline in profit, and Citigroup’s slid 1.6%. BlackRock (BLK.US) also fell 2.6% despite a 36% increase in profit. 

Since March 2022, the Federal Reserve has increased its principal lending rate on 12 occasions, amounting to an overall rise of 5.5 percent. Moreover, the central bank has made a firm commitment to maintain elevated rates for an extended period to tackle inflation that has proven to be resistant to change. These augmented rates may result in further declines in banks’ bond holdings and could drive up funding challenges since banks will have to offer higher interest rates to attract deposits. 

Big tech players were not spared, with Microsoft (MSFT.US) declining 1.4%, Nvidia (NVDA.US) dropping 2.7%, and Alphabet (GOOGL.US) falling 1%. AMD (AMD.US) plunged 4.2%, and Intel (INTC.US) lost 5.2% following reports that China had instructed its major telecom carriers to phase out foreign processors. 

Overall, the S&P 500 lost 1.6% for the week, the Dow dropped 2.4%, and the Nasdaq fell by 0.6%. 

(S&P500 Index Monthly Chart) 

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