The Market This Week: Is the Sky Really Falling?
Markets across the globe took a negative turn this week, prompting half of the financial world to predict the start of a major downturn and the other half shrugging it off. So which is it?
After only two days of trading in the red, it’s not clear how much longer the volatility will last. JPMorgan Chase’s (NYSE:JPM) earnings announcement, coupled with declines in the Internet and biotech sectors, shook investor confidence and caused a ripple effect across the market, already nervous from Federal Reserve Chair Janet Yellen’s hint that interest rates might rise from the 0 to 0.25 percent they have hovered at since 2008. The only sector to end the week relatively unscathed was emerging markets, with ProShares Ultra MSCI Emerging Markets ETF (NYSEARCA:EET) up 1.9 percent and the others within 1 percent of gain or loss.
Starting Thursday’s poor trading day was JPMorgan’s weaker-than-expected first-quarter results. The largest bank in the U.S. announced a net income loss of 19 percent, with declines across almost all businesses. In his annual shareholder letter, Chief Executive Jamie Dimon noted that JPMorgan had spent $2 billion more than usual on new mortgage rule implementation, and fines from last year’s settlement deals with regulators also cut into the company’s bottom line.