The S&P 500 index edged down 0.4% last week as several big banks began the quarterly earnings season with weaker-than-expected revenue. Despite the slight weekly drop, the market benchmark is up 1.4% this month.
JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) were among the banks that disappointed investors last week. JPMorgan and Wells Fargo both surpassed expectations for Q4 adjusted earnings per share but revenue missed Street views amid declines in investment banking. Citigroup, meanwhile, missed expectations on both the top and bottom lines.
JPMorgan Chief Executive Jamie Dimon issued a warning that “markets seem to underappreciate the potential hazards – including from complex geopolitical conditions, the risk of sticky inflation and elevated asset prices.”
The financial sector had the largest percentage drop of the week, falling 2.3%, followed by a 2% decline in consumer discretionary and a 1.5% slip in communication services. Health care and technology also edged lower.
On the upside, real estate jumped 4.1%, followed by a 3.7% climb in consumer staples and a 3% increase in industrials. Energy, utilities and materials also edged higher.
The stock market was closed yesterday for the Martin Luther King Jr. holiday.
Earnings reports expected this week include Netflix (NFLX), Johnson & Johnson (JNJ), Charles Schwab (SCHW), Procter & Gamble (PG), and Intel (INTC), among others.
Economic data will include December pending home sales, the first revision to Q3 gross domestic product and a delayed report on November personal consumption expenditures.
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