REUTERS/Brendan McDermid
- US stocks sank on Friday as investors digested disappointing bank earnings and a December slump in retail sales.
- Retail sales shrank 0.7% in December as COVID-19 lockdowns cut into holiday-season spending, according to Census Bureau data published Friday. Economists expected sales to hold flat from November.
- Less-than-stellar earnings reports from Citigroup and Wells Fargo led financials to drag on the S&P 500.
- While Democrats’ soft Senate majority lifts the odds of Biden signing his newly announced stimulus deal, Republicans could push for higher taxes to offset its cost or a stripped-down version of the measure.
- Watch major indexes update live here.
US equities sank for a second-straight session on Friday amid a drop in retail sales and as President-elect Joe Biden rolled out his plan for additional fiscal stimulus.
Fourth-quarter earnings kicked off with JPMorgan beating revenue and profit expectations. The bank reported a 42% jump in net income, bolstered by the release of $2.9 billion in loan-loss reserves.
Other firms posted less positive results. Citigroup’s revenue landed above estimates, but weaker-than-expected performance in its fixed-income division contributed to a miss on quarterly earnings. Wells Fargo shares slid after the firm’s fourth-quarter revenue came up short of analyst estimates.
Here’s where US indexes stood at the 4 p.m. ET close on Friday:
Energy stocks joined sinking financials as the biggest underperformers in the S&P 500. Real estate and utilities stocks outperformed through the session.
On the economic data front, disappointing retail sales weighed on bullish sentiments. Spending at US retailers contracted 0.7% in December as COVID-19 restrictions offset holiday-season sales, according to Census Bureau data published Friday. Economists surveyed by Bloomberg expected sales to stay flat from the month prior.
November’s reading was revised lower to a 1.4% contraction, suggesting surging coronavirus cases and lockdown measures swiftly cut into a V-shaped rebound in consumer spending.
“This likely is the nadir for retail sales, as the late-December stimulus and the pending stimulus under the Biden administration will boost both bank accounts and consumers’ spirits,” Robert Frick, corporate economist at Navy Federal Credit Union, said.
Biden unveiled a $1.9 trillion fiscal relief plan on Thursday that includes $1,400 direct payments, expanded federal unemployment benefits, and state and local government aid. Democrats’…
Read More: US stocks slide as disappointing bank earnings prompt end-of-week