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Shares plunge shortly after JPMorgan Chase CEO Jamie Dimon warns of recession | CNN Business


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CNN Business

So much for a sleepy Columbus day on Wall Street. Shares didn’t do much Monday morning, but fell in the afternoon after stark comments from JPMorgan Chase CEO Jamie Dimon who warned the United States is likely to plunge into recession in the next six to nine months. .

Dimon made the comments in an exclusive interview with CNBC that aired Monday.

“You can’t talk about the economy without talking about things in the future … and these are serious things,” Dimon said in the CNBC interview. He added that he thinks Europe is already in recession and the US is likely next.

The Dow fell more than 200 points in the afternoon, or about 1%, shortly after Dimon’s comments aired, before recovering a bit. The Dow was flat in late afternoon trading.

The S&P 500 and Nasdaq also fell 1.2% and 1.6% respectively in the afternoon, but also bounced off their lows. The S&P 500 lost 0.3% while the Nasdaq fell 0.5% with just over two hours to go before the closing bell.

Shares of JPMorgan Chase (JPM), one of 30 stocks in the Dow, fell nearly 1.5%. JPMorgan Chase (JPM) is one of several major banks to report profit on Friday.

Stocks have fallen this year on inflation concerns and how the Federal Reserve’s aggressive rate hikes to fight rising prices could eventually lead to a recession. Shares rocketed early last week, leading to hopes that the market had bottomed out.

But the sellers have returned with a vengeance in recent days. Friday’s mostly solid jobs report did little to allay fears of more major Fed rate hikes.

The Nasdaq hit a new 52-week low on Monday. The Dow and S&P 500 are also not far from their lows. The Dow is down about 20% this year and is back in a bear market along with the other two major market indices.

The bond market was closed on Monday, but yields on the 10-year Treasury benchmark are currently hovering around 3.89%. The 10-year yield, which strongly influences the direction of mortgage rates, briefly crossed 4% at the end of last month, reaching its highest level since October 2008.

Fed Vice Chairman Lael Brainard alluded to the challenges facing the housing market in a speech Monday. Brainard noted that “demand moderation resulting from monetary policy tightening has so far only been partially realized” and that “the transmission of tighter policy is most evident in highly interest-rate sensitive sectors such as housing.”

Brainard also warned that “in other sectors, delays in transmission mean that the policy measures taken so far will have their full effect on activity in the coming quarters.” In other words, the rest of the economy could slow down quickly.

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