U.S. stocks experienced a decline on Wednesday as investors reacted to significant bank earnings and recent economic data, while remaining vigilant for a potential Supreme Court ruling on tariffs and the U.S. response to unrest in Iran.
The tech-heavy Nasdaq Composite dropped by 0.8%, while the S&P 500 fell nearly 0.6%. The Dow Jones Industrial Average decreased by about 0.2%, continuing a trend from Tuesday when financial stocks led Wall Street indexes down from record highs. Concerns over potential U.S. military actions against Iran intensified as President Trump issued military threats following a violent crackdown on public protests. In response, oil prices surged to a two-month high due to warnings from Iran about retaliation against any American strikes, coupled with the U.S. pulling some personnel from bases in the region.
This backdrop coincided with quarterly earnings reports from major banks. Bank of America and Wells Fargo both reported significant profit increases driven by heightened trading activity. Citigroup’s shares rose impressively as the bank noted an 84% growth in financial advisory fees. These earnings reports were especially scrutinized after JPMorgan Chase’s earlier results fell short of expectations.
On the economic front, investors processed muted wholesale inflation data, which aligned with previous mild consumer inflation readings. These figures bolstered expectations that the Federal Reserve might hold interest rates steady in January. Additionally, retail sales for November were revealed to have increased more than anticipated, marking a shutdown-delayed release that highlighted a stronger than expected performance.
The prospect of lower Federal Reserve interest rates as a market stimulus boosted precious metal prices, leading gold and silver to reach new record highs. Silver briefly surpassed $90 for the first time amid rising geopolitical tensions and criticism directed at the Fed, particularly from Trump.
Attention also turned toward the Supreme Court, which had not yet ruled on a significant challenge to Trump’s authority concerning tariffs. Wednesday was designated as an opinion release day, but the Court did not specify which decisions would be announced. Trump had characterized the case as a national security issue, suggesting dire consequences if the ruling did not favor him.
In other news, Saks Global filed for Chapter 11 bankruptcy late Tuesday, struggling with debt stemming from its $2.7 billion acquisition of Neiman Marcus in 2024 and missing a $100 million interest payment. Richard Baker, who had been CEO for just two weeks, stepped down and was succeeded by former Neiman Marcus chief Geoffroy van Raemdonck. Saks noted that all store locations will remain operational during the bankruptcy process.
Amid these developments, stocks opened lower Wednesday as market participants digested strong bank earnings and fresh inflation data while remaining cautious about potential Supreme Court decisions on tariffs and military action in Iran.
Meanwhile, Nvidia’s shares slid slightly due to reports that Chinese customs were restricting imports of the company’s H200 AI chips, exacerbating an already tense U.S.-China relationship that impacts tech sales.
The Producer Price Index (PPI) data for November, released after a delay, showed a modest rise of 0.2% in prices for final goods and services, driven largely by a 10.5% hike in gasoline prices. Year-over-year, PPI indicated wholesale inflation at 3%, exceeding the anticipated 2.7%.
Retail sales also showed resilience, with total sales for November hitting $735.9 billion, a 3.3% increase from the previous year and higher than expected month-over-month figures, largely fueled by recovering auto sales.
As oil prices climbed amid fears of escalating tensions with Iran, Bank of America surpassed earnings expectations, while Wells Fargo struggled with profit due to severance costs linked to a significant workforce reduction.
The market continued to feel the weight of geopolitical and economic factors as investors adjusted their strategies in an unpredictable landscape.
