U.S. Big Banks’ CEOs Jointly Warned of “Bumpy Times Ahead”

The stock market extended an early week selloff on Tuesday as fears of an impending recession intensified, with big bank CEOs warning of tougher economic times ahead and companies continuing to announce job cuts — pushing major indexes closer to their yearly lows. Warnings from top U.S. banks about the likelihood of a recession triggered a risk-off sentiment in the markets. “You have to assume that we have some bumpy times ahead… You have to be a little more cautious with your financial resources, with your sizing and footprint of the organization.” Goldman Sachs CEO David Solomon said in an interview with Bloomberg TV. JPMorgan Chase Chairman and CEO Jamie Dimon said in an interview with CNBC that Inflation is eroding everything and may derail the economy and cause a “mild to hard recession.” The S&P 500 had dropped for a fourth straight session overnight, and the brakes have come on a rally that has lasted almost two months. Oil also fell sharply and, with Brent futures at $79.50 a barrel, is back where it began the year.

After falling nearly 500 points on Monday, the Dow Jones Industrial Average shed another 350 points, or 1%, on Tuesday — further erasing losses after a seven-month high reached in late November; the S&P 500 and tech-heavy Nasdaq similarly fell, down 1.4% and 2%, respectively. Stock losses worsened throughout the day, as sentiment waned after JPMorgan CEO Jamie Dimon on CNBC warned consumer spending will likely weaken next year and a similarly bearish call from Goldman Sachs CEO David Solomon, who told Bloomberg the gloomy economic outlook likely meant there are “some bumpy times ahead.”

Today, on the economic front, the U.S. Mortgage Bankers Association is scheduled to release its mortgage applications volume data for the week ended Dec. 2 before market opens. In the previous week, the gauge fell 0.8% on a weekly basis. The Labor Department is scheduled to release its final Q3 productivity and costs report at 8:30 a.m. EST. Later on, the Energy Information Administration is set to release its weekly crude oil inventories report at 10:30 a.m. EST.

Corporatewise, Facebook parent Meta (FB) also dragged down markets yesterday, with shares sliding 6.8%, following reports that European Union regulators ruled the company is required to seek users’ permissions before running advertising based on their personal data.

Campbell (CPB) just reported its fiscal Q1 2023 results having posted a double-digit growth and raised its fiscal 2023 guidance. Net Sales and Organic Net Sales increased 15% due to inflation-driven pricing, brand strength and continued supply recovery. Reported Earnings Before Interest and Taxes (EBIT) increased 16% to $436 million. Adjusted EBIT surged 15% to $449 million. Reported EPS increased 15% to $0.99. Adjusted EPS increased 15% to $1.02. Raises full-year fiscal 2023 guidance based on strong first-quarter results, sustained brand momentum and strengthened supply chain.

The global markets followed Wall Street lower, with the European stocks traded moderately lower at the time of writing. As of 2:00 p.m. CET, the French CAC 40 decreased by 0.51%, while the British FTSE 100 lost 0.15% and the German DAX lost 0.54%. On Fx front, the euro rebounded again against the dollar to hover above $1.0533, while the Pound Sterling advanced by 0.46% to reach $1.21934 level.

A final report released by the European Commission's Eurostat revealed earlier today, that the eurozone's GDP expanded by 0.3% in fiscal Q3, on a quarterly basis. The reading rose slightly above flash projections, which headed for 0.2% economic growth. In the European Union, the figure improved by 0.4%. On an annual basis, the figure was 2.3% and 2.5% higher in the euro area and in the EU respectively. On a quarterly basis, the member states that recorded the biggest growth were Ireland with 2.3%, followed by Cyprus, Romania, and Malta all coming at 1.3%. By contrast, those recording the biggest drops were Estonia at 1.8% and Latvia at 1.7%.

Asia's stockmarkets also wobbled lower earlier this morning as reality check questioned a soft economic landing in the U.S., and investors tamed their enthusiasm about China's quick reopening. In fact, China’s exports and imports both contracted at steeper paces in November as external demand continued to weaken and a worsening Covid outbreak disrupted production and cut demand at home. Philippine President Ferdinand Marcos Jr. said inflation is “running rampant and out of control” after data showed price increases quickened to a 14-year high in November.