Wall St. drops as JPMorgan leads bank stocks lower

(Reuters) – Banks led a slide in U.S. stocks on Friday, as results from big lenders including JPMorgan failed to enthuse investors keeping a wary eye on Russia’s plan to consider banning some U.S. imports.

Traders work on the floor of the New York Stock Exchange, (NYSE) in New York, U.S., April 10, 2018. REUTERS/Brendan McDermid/File Photo

Shares of the biggest U.S. bank by assets dropped 2.6 percent, overturning an initial gain in premarket trading when the bank reported a record quarterly profit that fell slightly short of expectations.

Wells Fargo sank 3.1 percent, also erasing initial gains, after the bank said it may have to pay a penalty of $1 billion to resolve investigations.

Citigroup and the S&P banks index also fell around 2.5 percent and the broader S&P financial index lost 1.3 percent, making it the biggest decliner among the 11 major S&P sectors.

Analysts cast the losses as driven in part by a bullish 10 days for the lenders, whose shares have generally been shakier in 2018 after doubling in value in a little over 18 months.

“This is the exception, and not the norm, to have good reports and stocks sell off,” said Art Hogan, chief market strategist at B. Riley FBR in Boston.

“But we did see the banks ramp up, over the last couple of days into these reports, sort of buy the rumor sell on the news is not unusual for the group.”

At 11:11 a.m. ET, the Dow Jones Industrial Average was down 87 points, or 0.36 percent, at 24,396.05, the S&P 500 6.39 points, or 0.29 percent, at 2,657.6 and the Nasdaq Composite 29.07 points, or 0.41 percent, at 7,111.18.


The bank results blow the starting whistle on U.S. earnings season, with Thomson Reuters data predicting profits at S&P 500 companies increased by 18.4 percent from a year ago, their biggest rise in seven years.

While the U.S. economy is performing well, geopolitical issues are weighing this year on stock markets after almost a decade of uninterrupted gains.

Senior lawmakers said on Friday that Russia’s lower house of parliament would consider draft legislation giving the Kremlin powers to ban or restrict a list of U.S. imports, reacting to new U.S. sanctions on Russian tycoons and officials.

Boeing fell 1.86 percent after a Russian senator said the company could be a casualty, with ongoing issues with engines for its 787 Dreamliner planes also weighing.

The top gainer among S&P sectors was the energy sector, up 1.1 percent as oil prices rose. [O/R]

Tesla rose 1.6 percent after founder Elon Musk said the electric car maker would be profitable in the third and fourth quarters of this year and would not have to raise any money from investors.

Dropbox fell about 7 percent after brokerage Instinet gave the cloud-based storage firm a “sell”-equivalent rating.

Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D’Souza and Patrick Graham

Tagged ,