U.S. equities declined on Friday as technology stocks reversed gains, while major banks reported strong loan growth, signaling resilient demand despite elevated interest rates. The S&P 500 closed lower, weighed by a 2.3% drop in the Nasdaq-100.
- Nasdaq-100 fell 2.3% amid tech sector sell-off, led by Nvidia (-4.1%) and Microsoft (-2.8%)
- JPMorgan Chase reported 6.2% YoY loan growth, with commercial lending up 7.8%
- Bank of America and Citigroup both posted loan growth above 5%, exceeding estimates
- 10-year U.S. Treasury yield rose to 4.32%, signaling tighter financial conditions
- CBOE VIX climbed to 18.7, indicating elevated market uncertainty
- Markets now assign 38% probability to a Fed rate cut in H1 2026
Wall Street ended the week on a downturn as technology shares reversed momentum, dragging major indices lower. The Nasdaq-100 dropped 2.3% following a sharp correction in semiconductor and AI-focused names, with Nvidia (-4.1%) and Microsoft (-2.8%) leading losses. The S&P 500 fell 1.1%, while the Dow Jones Industrial Average declined 0.6%. Despite the tech sell-off, financial sector results offered a bright spot. JPMorgan Chase reported a 6.2% year-over-year increase in total loans, with commercial and consumer lending rising 7.8% and 4.5%, respectively. Bank of America saw a 5.9% rise in loan volume, driven by strong credit card and mortgage demand. Citigroup’s loan growth came in at 5.1%, exceeding expectations and suggesting continued business confidence in the current rate environment. The divergence between tech and banking sectors underscored shifting investor sentiment. While tech valuations remain sensitive to rate expectations, the banking sector’s performance reflects sustained economic activity and pricing power in lending. Analysts noted that the strong lending data could reinforce the Federal Reserve’s cautious stance on rate cuts, with markets now pricing in a 38% probability of a rate cut in the first half of 2026. The yield on the 10-year U.S. Treasury rose to 4.32%, up 8 basis points, reflecting reassessment of inflation persistence. Equity volatility, as measured by the CBOE VIX, climbed to 18.7, its highest level since November. Investors are now focusing on upcoming inflation data and the Fed's upcoming policy meeting for further direction.