Stocks tumble, with 3 major indexes down over 1%

NEW YORK – U.S. stocks sold off on Friday after major U.S. banks’ results failed to impress, capping a week marked by marketmoving inflation data, evolving expectations for U.S. Federal Reserve policy, and looming geopolitical tensions.

All three major indexes fell more than 1% and registered losses on the week.

The S&P 500 index notched its biggest weekly percentage loss since January, while the Dow Jones Industrial Average’s weekly loss was its steepest since March 2023.

“When we look at what’s happened in the macro space, inflation has taken a turn for the worse and that has put more pressure on companies to deliver this earnings season,” said Mike Dickson, head of research at Horizon Investments in Charlotte, North Carolina. “Everyone’s a bit jittery with intense focus on how good earnings need to be.”

Results from a trio of big banks marked the unofficial launch of first-quarter earnings season.

JPMorgan Chase & Co., the biggest U.S. bank by assets, posted a 6% profit increase, but its net interest income forecast fell short of expectations. Its shares slid 6.5%.

Wells Fargo & Co.’s stock inched lower after profits fell 7% as net interest income dropped on weak borrowing demand.

Citigroup posted a loss after spending on employee severance and deposit insurance. Its stock dipped 1.7%.

Economic data this week, particularly Wednesday’s hotter-than-expected Consumer Price Index report, has suggested that inflation could be stickier than previously thought, prompting investors to reset expectations about the timing and extent of the Federal Reserve’s rate cuts this year.

“It’s a very real risk that we won’t get any rate cuts this year,” Dickson said, adding that while he does not expect a hike, the Fed would probably prefer to keep rates higher for longer.

“There’s just no data point that you can actually look at right now that says the Fed should cut rates.”

Boston Fed President Susan Collins said she expects a couple of rate cuts this year, even though it could take inflation some time to return to its targeted level.