Wall St. slides as investors weigh bank results, global risks

Reuters
FILE PHOTO - Traders work on the floor of the New York Stock Exchange (NYSE) shortly after the announcement that the U.S. Federal Reserve had hiked interest rates for the first time in nearly a decade in New York, U.S., on December 16, 2015. REUTERS/Lucas Jackson/File Photo

By Lewis Krauskopf

(Reuters) - Major U.S. stock indexes fell on Thursday for a third straight day as investors weighed earnings reports from big U.S. banks and geopolitical tensions, while the tech sector fell for a tenth consecutive session.

Wells Fargo (WFC.N) shares fell 3.3 percent, pulling down the S&P 500, after the bank reported a drop in mortgage banking revenue. Berkshire Hathaway (BRKa.N) also disclosed late on Wednesday that it had cut its stake in the bank.

JPMorgan (JPM.N) fell 1.2 percent and Citigroup (C.N) slipped 0.8 percent, even as those companies reported better-than-expected quarterly profits. Banks revealed more evidence of a slowdown in loan growth in their reports.

The S&P 500 banks index (.SPXBK) closed at its lowest point since early December.

Investors have sought safe-haven assets throughout the week due to geopolitical tensions in Syria and North Korea. News of a massive bomb being dropped by the United States in eastern Afghanistan on Thursday added to uncertainty.

Kate Warne, principal investment strategist at Edward Jones in St. Louis, said a dip in bond yields put pressure on stocks ahead of a holiday weekend in the United States.

"What we've seen is investors from the rest of the world putting more money in U.S. Treasuries" due to geopolitical concerns, Warne said.

The Dow Jones Industrial Average (.DJI) fell 138.61 points, or 0.67 percent, to 20,453.25, the S&P 500 (.SPX) lost 15.98 points, or 0.68 percent, to 2,328.95 and the Nasdaq Composite (.IXIC) dropped 31.01 points, or 0.53 percent, to 5,805.15.

The benchmark S&P 500 has climbed 8.9 percent since President Donald Trump's Nov. 8 election, supported by his planned economic agenda of tax cuts and economic stimulus. But the rally has stalled the past six weeks as some investors question Trump's ability to enact his proposals.

There is "some concern among investors that there is now a shift going on in Washington to international and away from a domestic policy," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

The S&P 500 financial index (.SPSY) dropped 1.3 percent, its fifth straight day of losses.

Energy shares (.SPNY) were the worst-performing group, falling 1.8 percent.

The technology sector (.SPLRCT) fell 0.4 percent, marking its longest losing streak since May 2012.

The results from banks kicked off what is expected to be a strong first-quarter U.S. reporting season. S&P 500 companies are expected to post a 10.4 percent rise in earnings for the period, according to Thomson Reuters I/B/E/S.

"We could have double-digit earnings growth; we haven’t seen that in some time," said Karyn Cavanaugh, senior market strategist at Voya Investment Management in New York. "Investors are going to be impressed with that."

A report from the University of Michigan showed that U.S. consumer sentiment unexpectedly strengthened in April as consumer optimism on current economic conditions climbed to its highest level since November 2000.

About 6.2 billion shares changed hands on U.S. exchanges, below the 6.6 billion daily average over the last 20 sessions.

Declining issues outnumbered advancing ones on the NYSE by a 2.56-to-1 ratio; on Nasdaq, a 2.24-to-1 ratio favoured decliners.

The S&P 500 posted seven new 52-week highs and 1 new low; the Nasdaq Composite recorded 29 new highs and 51 new lows.

(Additional reporting by Sinead Carew in New York and Yashaswini Swamynathan in Bengaluru; Editing by Meredith Mazzilli and Dan Grebler)