Wall Street drops as big banks fall after results

By Devik Jain and Medha Singh (Reuters) - Wall Street's main indexes dropped on Friday, weighed down by losses in major U.S.

Reuters January 16, 2021 00:08:18 IST
Wall Street drops as big banks fall after results

Wall Street drops as big banks fall after results

By Devik Jain and Medha Singh

(Reuters) - Wall Street's main indexes dropped on Friday, weighed down by losses in major U.S. lenders after their earnings reports, while incoming President Joe Biden's $1.9 trillion stimulus plan also sparked fears of an increase in corporate taxes.

Shares of JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co, which had seen a strong rally in the run-up to earnings, were all down even as the banks posted better-than-expected fourth-quarter profits.

JPMorgan fell 2.2% following a seven-day winning streak that had pushed the stock about 12% higher.

The S&P 500 banks index shed 3.3%.

Wall Street's main indexes are set to wrap up the week lower after climbing to record highs recently on bets of a hefty fiscal package and optimism about vaccine distribution.

Also weighing on markets was a Washington Post report that said COVID-19 vaccine reserve was already exhausted when the Donald Trump administration vowed to release it this week, dashing hopes of expanded access. (https://wapo.st/2MZoiwa)

"It's a concern of the vaccine and maybe, to a lesser extent, the Biden spending plan that he outlined last night," said Paul Nolte, portfolio manager at Kingsview Investment Management in Chicago.

"It's more of a healthy correction to some of the advances that we've seen in the market."

Biden's stimulus proposal, unveiled on Thursday, includes some $1 trillion in direct relief to households and has sparked fears that the government would need to hike corporate taxes to fund the spending.

"Biden's concern is not the stock market, his concern is Main Street and that's a good thing ... but that tells you there's going to be an increase in corporate taxes," said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas.

Meanwhile, data showed a further decline in U.S. retail sales in December - the latest sign the economy lost considerable speed at the end of 2020.

Nine of the 11 major S&P sectors fell, with energy, financials and industrials posting the steepest declines after leading markets higher in the recent rally.

The defensive utilities and real estate were the only sectors trading higher.

At 11:39 a.m. ET, the Dow Jones Industrial Average fell 135.21 points, or 0.44%, to 30,856.31, the S&P 500 lost 18.40 points, or 0.48%, to 3,777.14 and the Nasdaq Composite lost 60.55 points, or 0.46%, to 13,052.08.

Earnings for S&P 500 companies are expected to decline 9.5% in the final quarter of 2020 from a year ago, but are expected to rebound in 2021, with a gain of 16.4% projected for the first quarter, according to IBES data from Refinitiv.

Exxon Mobil Corp fell 3.6% after a report said the U.S. Securities and Exchange Commission launched an investigation of the oil major, following a whistleblower's complaint that the company overvalued a key asset in the prolific Permian shale oil basin.

Spotify Technology SA dropped about 5% after Citigroup downgraded its shares to "sell".

Hewlett Packard Enterprise Co rose 1% after J.P. Morgan upgraded the enterprise software maker's stock to "overweight".

Declining issues outnumbered advancers by a 2.8-to-1 ratio on the NYSE and by a 2.9-to-1 ratio on the Nasdaq.

The S&P 500 posted 5 new 52-week highs and no new lows, while the Nasdaq recorded 180 new highs and eight new lows.

(Reporting by Devik Jain and Medha Singh in Bengaluru; Editing by Saumyadeb Chakrabarty and Maju Samuel)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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