US open: Stocks extend losses as Q2 bank earnings begin to arrive

dl exchange place wall st street pl new york city nyc ny nyse stock exchange dow jones sp nasdaq finance dollar dollars us usa united states of america — Exchange PlaceSharecast photo / Josh White

Wall Street stocks were firmly in the red early on Thursday as Q2 bank earnings began to roll in.

As of 1530 BST, the Dow Jones Industrial Average was down 1.85% at 30,204.71, while the S&P 500 was 1.88% weaker at 3,730.20 and the Nasdaq Composite came out the gate 1.85% softer at 11,039.35.

The Dow opened 568.08 points lower on Thursday, extending losses recorded in the previous session following a hotter-than-expected CPI reading.

Quarterly earnings were in focus at the opening bell after banking giant JPMorgan said profits fell 28% throughout the period as a result of the group building up reserves for bad loans. JPM also said it had halted buybacks on the back of the earnings miss.

Morgan Stanley also missed profit and revenue expectations with its second-quarter earnings, citing weaker-than-expected investment banking revenue. Morgan Stanley reported earnings of $1.39 per share, short of expectations of $1.53 per share, as profits slumped 29% year-on-year to $2.5bn.

Also in the corporate space, Twitter shares traded lower after the social media giant went down for tens of thousands of users across the globe.

Treasuries also remained inverted early on Thursday, potentially indicating a coming recession, with the two-year note yielding 3.257%, ahead of its ten-year counterpart at 3.010% - one of the biggest inversions of this particular spread in more than 20 years.

Adding to recessionary fears, the Federal Reserve's Beige Book, released overnight, indicated that the central bank may also be worried about an upcoming recession due to persistently high inflation.

On the macro front, US producer prices increased to 140.43 points in June, according to the Bureau of Labor Statistics, up from 138.89 points in May. The producer price index for final demand increased a seasonally adjusted 1.1% in June following advances of 0.9% in May and 0.4% in April. On an unadjusted basis, final demand prices moved ahead 11.3% for the 12 months ended 30 June - the largest increase since a record 11.6% jump in March.

Elsewhere, Americans filed new unemployment claims at an accelerated clip in the week ended 9 July, according to the Labor Department. Initial claims for unemployment benefits increased by 9,000 week-on-week to 244,000, ahead of market expectations for a reading of 235,000 for the highest print since November 2021.

The four-week moving average came to 235,750, an increase of 3,250 from the prior week's unrevised average of 232,500, while the total number of continued weeks claimed for benefits in all programs for the week ending 25 June was 1.40m, an increase of 72,504 from the previous week.

Still to come, the Federal Reserve's Christopher Waller will deliver a speech at 1600 BST.

Reporting by Iain Gilbert at Sharecast.com

Dow Jones - Risers

Dowdupont Inc. (DWDP) $30.52 0.00%
Honeywell International Inc. (HON) $230.94 0.00%
Boeing Co. (BA) $143.79 -0.11%
Walmart Inc. (WMT) $124.99 -0.30%
International Business Machines Corporation (CDI) (IBM) $136.49 -0.50%
Verizon Communications Inc. (VZ) $50.18 -0.65%
Merck & Co. Inc. (MRK) $93.06 -0.76%
McDonald's Corp. (MCD) $250.64 -0.80%
Johnson & Johnson (JNJ) $173.87 -0.89%
Walgreens Boots Alliance, Inc. (WBA) $36.86 -1.02%