Markets Fall as Consumers Get Scared

This morning the Thomson Reuters/University of Michigan preliminary reading on consumer confidence was released, and it indicated that the average American is becoming gloomier about the health of the economy. The reading dropped from 78.6 in March to 72.3 in April. Economists were expecting the index to hold steady at 78.5. Other measures have also slipped recently: The barometer of current economic conditions fell from 90.7 to 84.8, and the gauge of consumer expectations dropped from 70.8 to a 64.

While the consumer sentiment report usually garners the most attention, investors should view the reports as a whole in order to gain a comprehensive picture of the economy. Right now, that picture doesn't look so good, therefore the markets are trading lower today. As of 12:55 p.m. EDT the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is off by 25 points, or 0.17%. The S&P 500 is down 0.41%, while the NASDAQ has lost 0.34%.

Shares of JPMorgan Chase (NYSE: JPM  ) are flat, having recovered from earlier losses after the company announced earnings this morning. The company beat on earnings per share, but revenue decreased by 3% to $25.8 billion. Additionally, the company warned that net interest margins will continue to be pressured and will likely put strain on revenue in the future.

Fellow bank Wells Fargo (NYSE: WFC  ) also announced earnings this morning, and like JPMorgan, it indicated that revenue growth was an issue. Wells blamed its revenue shortfall on reduced mortgage loans during the quarter.

Shares of Bank of America (NYSE: BAC  ) are likely trading lower due to some of the comments made by Jamie Dimon and Wells Fargo's top management. All the big banks are essentially doing the same things and are exposed to the same risks. B of A was the best-performing Dow component in 2012, and it has risen more than 4% thus far in 2013. Its shares are down 0.8% today as investors lock in gains and flee the stock prior to its earnings release on April 17.

Shares of Cisco (NASDAQ: CSCO  ) are down 1.2% this afternoon. There's little news on the company, but the stock did flirt with its 52-week high yesterday and has been on quite the run over the past few trading sessions. After closing at $20.57 on Monday, the stock rose 5.44% to a closing price of $21.69 yesterday. Today's pullback is likely the result of traders taking profits before the weekend.

Is B of A a buy?
In our exclusive research report on Bank of America, two of the Fool's best financials analysts take an in-depth look at the bank's operations and detail three reasons to buy and three reasons to sell. To get your copy of this in-depth report, which comes with a full year of updates, click here now.


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2361115, ~/Articles/ArticleHandler.aspx, 9/19/2014 10:20:00 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement