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Why is the stock market down today? Dow tumbles, JP Morgan slides.

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Some of Wall Street’s biggest banks kicked off earnings season on Thursday.

Ed Jones / AFP via Getty Images

The stock market was falling after JPMorgan Chase’s disappointing earnings raised concerns about a potential recession. This is not the only concern.

The Dow Jones Industrial Average is down 602 points, or 2%, while the S&P 500 is down 2% and the Nasdaq Composite is down 1.9%.

The stock market was already gearing up for a bad day when JPMorgan’s earnings came on tape. The bank’s earnings and revenue fell short of forecasts and management set aside $1.1 billion in provisions for potential loan losses. However, the big surprise was the decision to suspend share buybacks. Together, the news signals that the bank is preparing for a weak economy.

Jamie Dimon said, “High inflation, loss of consumer confidence, uncertainty about higher rates and a never-before-seen quantitative tightening and their impact on global liquidity … are likely to have negative consequences on the global economy.” Chairman and CEO of JP Morgan. “We are ready for anything to happen.”

Shares were down 4.8%.

That’s not the only problem sending the S&P 500 for a fifth straight day of losses, as inflation continues to rise. This came as a producer price index rose 11.3% year-on-year for June. This means companies are incentivized to raise prices, contributing to consumer inflation and raising more rates.

Or at least the big ones. The Federal Reserve is now likely to act even more aggressively in raising interest rates to counter higher prices. A full percentage-point rate increase is on the table, rather than the three-quarter point increase the market had expected. “The Fed may actually increase by 100 basis points at the July meeting,” wrote Tom Esser, founder of Sevens Report Research.

Interest rates are already rising to reflect this possibility. The 2-year Treasury yield is up to 3.23%, a level not reached since late June. CME Fed Watch puts the prospect of a full percentage point increase at 86%, up from 80% on Wednesday. While those rate hikes can help curb inflation, they also carry risks.

“The more they raise rates, the more the bearish outlook grows,” wrote NatAlliance Securities’ Andrew Brenner.

Elsewhere, earnings season will continue with Citigroup (C) and BlackRock (BLK) on Friday, and investors are concerned that analysts will have to start cutting their projections for future earnings, something they’re determined to do. are reluctant.

“The consensus projections are strong, and we consider them over-optimistic given the deteriorating macroeconomic background,” says Richard Saperstein, chief investment officer at Treasury Partners.

Recent inflation suggests that margins will be under pressure as well. With the PPI heating up, companies will try to raise prices, but consumer prices are rising slowly, suggesting that corporations may not be successful.

“The current environment will reduce margins for many businesses as well,” wrote Paul Gray, managing director of Ironhold Capital.

And that’s another concern for investors.

Here are the stocks trending Thursday:

Shares of ConAgra Brands (CAG) fell 7.6% after the company reported a profit of 65 cents per share, beating estimates of 63 cents per share. Sales came in at $2.91 billion, missing expectations of $2.93 billion.

Taiwan Semiconductor Manufacturing Company (TSM) gained 0.2% after the chip maker raised its revenue forecast for the year and beat second-quarter earnings estimates following strong demand from auto makers and consumer goods companies. TSMC reported net income of $1.55 per share for the June quarter, higher than the $1.44 expected by analysts. The news also prompted a jump in chip maker Infineon (IFX. Germany), which rose 1% in Frankfurt trading.

Tesla (TSLA) fell 3.1%. Lady Karpathy, director of artificial intelligence and head of the electric-vehicle maker’s Autopilot vision team, said on Wednesday she was leaving the company.

Martin Marietta Materials (MLM) stock fell 1% after upgrading from peer to outperform at Wolfe Research.

Shares of Costco Wholesale (COST) gained 0.6%. Deutsche Bank upgraded the shares from hold to buy.

Write to Jack Denton at [email protected]

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