What happened
Markel (MKL -0.78%) saw its share price drop 4.5% Thursday morning on what was a choppy day for the markets. The Dow Jones Industrial Average was down about 628 points at 10:11 a.m. ET, while the S&P 500 was down more than 2% in the morning. Markel hit its low around 12:51 p.m. ET.
Markel, which offers specialty insurance and has a portfolio of public and private companies, rebounded slightly but was still down 3.98% at 3:38 p.m. ET today.
So what
One day after a historically bad June inflation report, which saw the Consumer Price Index (CPI) increase 9.1%, the highest year-over-year increase since 1981, Thursday opened with less-than-great earnings news from two early second-quarter financial bellwethers.
JPMorgan Chase (JPM 0.15%), the nation's largest bank, missed revenue and earnings estimates for the second quarter, and the stock price was down 4.5% in early trading. Investment bank Morgan Stanley (MS -1.38%) also underperformed earnings and revenue expectations.
The weak earnings sent the market tumbling, led by financial stocks, of which Markel is one. The Travelers Companies (TRV 0.26%), Goldman Sachs (GS -0.71%), and Citigroup (C -1.09%) were also down big.
Banks are among the first to report earnings every quarter, and they set the tone for the quarter -- and this news does not bode well. JPMorgan Chase CEO Jamie Dimon said on the earnings call that "geopolitical tension, high inflation, waning consumer confidence, the uncertainty about how high rates have to go ... are very likely to have negative consequences on the global economy sometime down the road."
Also, analysts at Bank of America (BAC -1.07%) lowered their price target for the S&P 500 by year's end to 3,600, which would be about a 5% drop from current levels.
Now what
Markel is not a bank and had a very good first half of the year, with its stock price up 4.8% through June 30. Its specialty insurance business should do well in a rising-rate environment, and Markel Ventures, its private equity business, saw revenue rise 35% in the first quarter. Its shares might be volatile in the days ahead as big banks report earnings, but investors should be more tuned in on Aug. 4, when Markel reports earnings.
Also, more in the near-term, it will be interesting to see earnings reports next week from some of the big insurance companies, like Travelers, which reports on July 21.
