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Earnings drop at JPMorgan drags bank stocks lower

Traders work on the floor of the NYSE

Traders work on the floor of the NYSE at the close of the trading day in Manhattan on April 10, 2014. Credit: EPA / Andrew Gombert

Weaker earnings at JPMorgan Chase are dragging bank stocks lower in afternoon trading. All three major indexes are down, with the Standard & Poor's 500 index heading for its worst week since January. Technology stocks were still weak a day after the worst rout for the Nasdaq composite index since 2011.

KEEPING SCORE: The S&P 500 fell seven points, or 0.4 percent, to 1,826 as of 1:14 p.m. on Wall Street. The Dow Jones industrial average fell 78 points, or 0.5 percent, to 16,092. The Nasdaq composite index dropped 15 points, or 0.4 percent, to 4,039.

BANK EARNINGS: JPMorgan Chase fell $1.69, or 3 percent, to $55.70 after the bank missed analysts' earnings estimates. The nation's biggest bank by assets said its earnings fell 20 percent in the first quarter as revenue from bond trading and mortgage lending fell.

"They're just struggling to grow, and then they didn't have the strength out of the investment bank to help offset that," said Shannon Stemm, financial services analyst for Edward Jones. "All around, it's just a lackluster quarter for them." Wells Fargo rose 58 cents, or 1.2 percent, to $48.29 after its earnings beat estimates.

RETAILER ROUT: Gap Stores fell 85 cents, or 2 percent, to $38.44. The San Francisco-based company, which owns the Gap, Banana Republic and Old Navy brands, said revenue for stores open at least a year fell 6 percent.

TECH TURMOIL: Tech stocks were mostly lower, but some highflying stocks that were crushed when the Nasdaq's plunged on Thursday are staging a comeback. Facebook climbed 66 cents, or 1 percent, to $59.82. Gilead Sciences rose $3.02, or nearly 5 percent, to $68.50, reversing a big slide in recent days. The biotechnology stock is down 10 percent in 2014.

EARNINGS FEARS: Adding to jitters over tech, investors have grown skeptical that corporate earnings across industries will rise enough to keep the stock rally going after a nearly 30 percent gain in the S&P 500 last year. Financial analysts expect first-quarter earnings for companies in the S&P 500 to drop 1.6 percent from a year earlier, according to a report released Friday from FactSet, a financial data provider. If that forecast is borne out, it would be only the second quarterly drop in three years.

THE QUOTE: "Earnings are going to come in on the sloppy side, but I don't see a correction beyond eight percent," says Peter Cardillo, chief market economist at Rockwell Global Capital.

BRIGHT SPOTS: Ford rose 17 cent, up 1 percent, to $15.81 after U.S. safety regulators decided against seeking a recall of Ford F-150 pickup trucks. They had been investigating complaints about reduced power in engines.

BONDS: Treasury prices rose. The yield on the benchmark 10-year Treasury note fell to 2.62 percent from 2.65 percent late Thursday.

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