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Sharp drop in banks weighs on stocks

Trader Jonathan Corpina, left, and specialist Thomas Schreck

Trader Jonathan Corpina, left, and specialist Thomas Schreck work on the floor of the New York Stock Exchange on Tuesday. Credit: AP/Richard Drew

Bank stocks buckled on Friday, even after several reported fatter profits than analysts expected, and the sharp declines overshadowed gains elsewhere in the market to drag the S&P 500 lower.

JPMorgan Chase and several other financial titans marked the unofficial start of the earnings reporting season, and expectations were high for them, as they are for most major companies. Wall Street is forecasting the strongest growth in seven years for S&P 500 companies, and the hope has been that healthy profit reports in coming weeks will steady the market following a rough couple of months.

But high expectations can be as much a burden as cause for optimism. JPMorgan Chase reported its biggest-ever profit and topped analysts' expectations. But investors were already anticipating the good news that it delivered, such as healthier trading revenue, and took note of things like an increase in charge-offs for credit cards. JPMorgan Chase's shares fell 2.7 percent to $110.30 to lop off most of the big gains it had made earlier in the week.

The S&P 500 fell 7.69 points, or 0.3 percent, to 2,656.30. The loss pared the index's gain for the week to 2 percent.

The Dow Jones industrial average dropped 122.91, or 0.5 percent, to 24,360.14, and the Nasdaq composite lost 33.60, or 0.5 percent, to 7,106.65.

Wells Fargo fell 3.4 percent to $50.89, and Citigroup dropped 1.6 percent to $71.01 even though both reported profits that beat expectations. The possibility of a big settlement with federal regulators hung over Wells Fargo's results.

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