It was a quiet Columbus Day on Wall Street. Stocks didn’t do much Monday morning, but fell in the afternoon after Jamie Dimon, CEO of JPMorgan Chase, made harsh comments about the likelihood that the United States would enter a recession within six to nine months.
The comments were made by Dimon in an exclusive interview that CNBC aired Monday.
Dimon stated in the CNBC interview that “you can’t talk economy without talking about stuff for the future…and this stuff is serious stuff.” Dimon said that he believes Europe is already in recession and that the US will be next.
After Dimon’s remarks, the Dow plunged more than 200 points before rebounding to close the trading day at 0.3%.
Both the S&P 500 (Nasdaq) and Nasdaq fell sharply in the middle of the day but bounced back from their lows. The S&P 500 ended with a 0.8% drop, while the Nasdaq lost 1%.
JPMorgan Chase (JPM) shares were almost 1% lower than the Dow’s 30 stocks. JPMorgan Chase (JPMM) is one among many big banks that will report earnings Friday.
Fears about inflation and the Federal Reserve’s aggressive interest-rate hikes to combat surging prices have caused stocks to plummet this year. This could lead to a recession. The market was expected to bottom last week after stocks soared in the early hours of last week.
In the last few days, sellers have returned with a vengeance. Fears of Fed rate increases were not dispelled by Friday’s solid jobs report.
Monday’s 52-week low for the Nasdaq was a new record. The Dow and S&P 500 have not been far from their lowest levels. The Dow has fallen about 20% this year, and it is now back in a bearish market with the other major market indexes.
The bond market was closed Monday. However, yields on the 10-year Treasury benchmark are hovering at 3.89%. The 10-year yield, which has a significant influence on the direction of mortgage rates, briefly exceeded 4% last month and reached its highest point since October 2008.
Monday’s speech by Lael Brainard, Fed vice chair, mentioned the challenges facing the housing market. Brainard stated that the moderation of demand caused by monetary policy tightening has only been partially realized and that tighter policy transmission is most apparent in high-interest-sensitive sectors such as housing.
Brainard warned, “In other sectors, transmission delays mean that policy measures to date will have a full effect on activity within the coming quarters.” This means that the economy may slow down in the future.