NEW YORK (Reuters) - U.S. stocks dipped on Friday, weighed by a decline in JPMorgan Chase after a one-two punch of bad news for the bank, as investors digested a flurry of economic data.
The Federal Reserve told Goldman Sachs Group Inc (GS.N) and JPMorgan Chase & Co (JPM.N) that they must fix flaws in how they determine capital payouts to shareholders, though it still approved their plans for share buybacks and dividends.
A Senate report also alleged JPMorgan had ignored risks, misled investors, fought with regulators and tried to work around rules as it dealt with mushrooming losses in a derivatives portfolio. The barrage of bad news for JPMorgan, long seen as the safest and best-managed U.S. bank, could taint its reputation and that of Chief Executive Jamie Dimon.
JPMorgan (JPM.N) shares slumped 3.2 percent to $49.37 as the biggest drag on both the Dow and S&P 500. Rival Bank of America (BAC.N) rose 3.1 percent to $12.49. Goldman (GS.N) shares slipped 0.9 percent to $152.70. The S&P financial sector shed 0.3 percent.
Data showed consumer prices rose 0.7 percent in February, the largest increase in nearly four years due mostly to higher gasoline prices, though the climb wasn't enough to garner much attention from the Federal Reserve.
In addition, New York Federal Reserve data showed the manufacturing sector expanded for a second straight month in March, although the 9.24 reading was down from 10.04 in February and expectations for a reading of 10.
Despite the market's declines, the S&P 500 remained within striking distance of its all-time closing high of 1,565.15.
Improving economic signs and expectations that the Federal Reserve will continue its easy monetary policy have helped boost the Dow by 10.5 percent and the S&P by more than 9 percent this year so far, with no major pullbacks.
"If we do get a little bit of a retracement it's just a dip and all these dips are being met by investors looking to buy any kind of reversal they can get near," said Gordon Charlop, managing director at Rosenblatt Securities in New York.
The Dow Jones industrial average dropped 56.98 points, or 0.39 percent, to 14,482.16. The Standard & Poor's 500 Index lost 6.07 points, or 0.39 percent, to 1,557.16. The Nasdaq Composite Index fell 10.75 points, or 0.33 percent, to 3,248.18.
Market volatility may be heightened at the open and near the close due to 'quadruple witching' - the quarterly settlement and expiration of four different types of March equity futures and options contracts. Expiration can lead to greater volume and volatility as players adjust or exercise derivative positions.
Data from Thomson Reuters' Lipper service showed investors in U.S.-based funds poured $11.26 billion of new cash into stock funds in the latest week, the most since late January.
Ulta Salon (ULTA.O) slumped 14 percent to $76 after the beauty products retailer forecast first-quarter profit below Wall Street estimates, despite strong results.
Also on Friday, the Federal Reserve said industrial production grew 0.7 percent last month, more than the expected 0.4 percent, as manufacturing rebounded, indicating the economy continues to slowly gain steam.
The Thomson Reuters/University of Michigan's preliminary reading on the overall index on consumer sentiment dropped to 71.8 from 77.6 in February and below the 78 estimate, on dissatisfaction with government economic policies.
(Editing by Bernadette Baum)