Stocks are facing pressure as the markets digest the disappointing earnings reports from major banks, including JPMorgan (JPM), Citigroup (C), and Wells Fargo (WFC). NewEdge Wealth Chief Investment Officer Cameron Dawson joins Yahoo Finance to discuss the market outlook.

Dawson notes that she is closely following bank discussions about credit health for both consumers and corporations — in other words, how end customers are dealing with a higher-for-longer environment. Despite bank conversation about post-pandemic normalization, Dawson questions whether new levels of delinquency and higher balances compared to disposable income actually represent "outright weakness" in credit.

Dawson acknowledges that consumers have been able to "keep on spending" despite higher interest rates. However, she points out that other factors, such as rising debt levels and flatlining wage growth, could start to impact consumer spending going forward.

Regarding recession fears, Dawson indicates that GDP growth estimates will be a key data point to monitor.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance.

This post is written by Angel Smith

Video Transcript

- The stocks falling after those big bank earnings kicking off this morning. We had shares of J.P. Morgan, Citi, and Wells Fargo. They were moving after this net interest income concern coming out here. Now, all of these stocks moving to the downside. Citi had been up earlier this morning. It looks like now after digesting that report, we're seeing it coming down a little bit here.

To discuss more of this, we are joined by Cameron Dawson, NewEdge Wealth Chief Investment Officer. Cameron, great to meet you officially. So excited to have you on this morning. I do want to start on these bank earnings because I'm curious from your perspective, what's standing out most to you about which of these firms is able to kind of withstand this higher for longer environment and what else is seeming like the big headline for you this morning.

CAMERON DAWSON: Well, we think that the largest banks are the ones that are going to be able to deal with higher for longer far better than the smaller banks, which we'll start to hear from more next week. Really, the thing that we're listening for very closely from the banks is their discussion about credit health, not just for consumers, but also for corporations.

How are those end customers dealing with a higher for longer environment? And what we are hearing from the likes of J.P. Morgan is that they keep using this term normalization, which just means that we're seeing things get back to more normal levels and territory post the pandemic where you saw things be in very odd levels for quite some time.