Sell-off in bank shares leads US stocks lower

Sell-off in bank shares leads US stocks lower

New York: Wall Street stocks finished lower on Friday after a batch of earnings reports from large US banks sparked a selloff in financial shares.

The Dow Jones Industrial Average shed 0.5 percent to 24,360.14.

The broad-based S&P 500 fell 0.3 percent to 2,656.30, while the tech-rich Nasdaq Composite Index dropped 0.5 percent to 7,106.65.

Although earnings from JPMorgan Chase and other large banks bested analyst expectations, the sector had risen in anticipation of the reports and the results — while good — were not strong enough to propel the stocks higher, analysts said.

“You had a sector selloff in financials,” said Art Hogan, chief market strategist at Wunderlich Securities. “When the group started selling off, it took the whole market with it.”

“It feels like we just ramped up expectations too much,” he added.

JPMorgan Chase, the biggest US bank by assets, reported a 35.1 percent jump in first-quarter earnings to $8.7 billion and offered an upbeat outlook on the US economy. Shares still fell 2.7 percent.

Similarly, Citigroup shed 2.0 percent despite a 13 percent rise in first-quarter earnings to $4.6 billion behind higher overall corporate lending and strong gains in equity trading.

Wells Fargo tumbled 3.4 percent after it reported a 5.7 percent rise in first-quarter earnings that was overshadowed by a drop in revenues and the announcement that it was in talks with US regulators on a proposed $1 billion penalty over investigations of automobile and mortgage practices.

Other large banks, including Bank of America and Goldman Sachs, also fell.

Analysts are hoping a successful US corporate earnings season will lift US stocks following a rocky period.

The market has been pressured by fears of a trade war, concerns about higher US interest rates and worries about the Trump administration’s prospects following myriad controversies and the near-constant churn of White House staff.