The U.S. stock market took a dip on Thursday to close out another week of losses as investors digest a storm of bank earnings under increased CPI pressure.
Both the tech-heavy Nasdaq Composite and Standard & Poors 500 indices fell 2.2% and 1.2%, respectively, to their lowest levels in four weeks. Unfortunately, the Dow Jones Industrial Average did not far much better, closing 0.3% lower, after gaining a bit of ground earlier in the day. At the same time, Treasury yields are soaring, as the 10-year benchmark jumped 2.8%. This is the biggest single-week climb the market has seen since December of 2018.
Quarterly results from big banks revealed an overall flimsy market for the first part of 2022. This is quite a dramatic shift from the boom of the previous year, which has been marked by record-setting deal-making activity as well as a substantial financial bump from the release of capital reserves that had been originally set aside to address loan losses from the pandemic.
Indeed, most of the indexes across the U.S. market have now finished down two weeks in a row. Experts attribute the conflict in Eastern Europe and inflationary pressures to the noticeable drop. In addition, there is an expectation that the Federal Reserve will be more aggressive in the near future in an attempt to slow down the rise in prices, and this is also contributing to a sluggish market.
All of this in mind, analysts have certainly cooled their forecasts for the present quarter. For example, some of the data suggests that collective EPS expectations have slipped from $52.21 to $51.83 for Q1.
Going into the second quarter of 2022, though, EPS forecasts are looking better; and so does the rest of the year. Q2 forecasts suggest a 1.6% boost, from $55.16 to $56.07; and Q3 could grow another 2.4%, from $57.82 to $59.23. The forecasts also point at Q4 improving nearly 4%, from $58.31 to $60.59. Overall, 2022 could see a bump of about 2%, to $227.80, by the end of the year.