Stocks fall on JPMorgan results, sentiment survey
(AP) — Rising loan losses in JPMorgan Chase & Co.'s consumer bank business and a disappointing reading on consumer sentiment sent investors rushing from stocks Friday.
Financial stocks led the market lower, pulling major stock indexes down more than 1 percent from 15-month highs. The Dow Jones industrial average lost 140 points. Interest rates fell in the bond markets as investors bought Treasurys in search of safety.
JPMorgan, regarded as one of the strongest U.S. banks, warned investors it was too soon to say that losses on mortgages and other loans have peaked. The weakness in JPMorgan's consumer business hurt other financial stocks, which led the rest of the market lower.
Investors took little solace from a much stronger than expected profit report late Thursday from Intel Corp., the biggest maker or computer chips.
Commodity prices slumped as the dollar turned higher, and a disappointing report on consumer sentiment also weighed on the market. The preliminary Reuters/University of Michigan consumer sentiment index rose to 72.8 from 72.5 in late December but came in weaker than economists had forecast.
The news from JPMorgan brought concerns about profits at other big banks, many of which post results next week. Banks have been saying since the financial crisis exploded in the fall of 2008 that mortgages resetting at higher rates and job losses would push more loans into default. The latest comments gave investors a fresh reminder that the economy still needs more time to heal.
After a 10-month run in the market that has been all but unbroken, some investors are starting to believe that stocks are running out of forward momentum. The Dow on Thursday closed above 10,700 for the first time since October 2008 and has climbed 63.6 percent since March, though it's still down 24.4 percent from its peak in October 2007.
Investors will get more signals about the economy next week as more companies report earnings. U.S. markets are closed on Monday for Martin Luther King Jr. Day.
Adam Gould, senior portfolio manager at Direxion Funds in New York, said the reaction to JPMorgan's report signaled that investors had gotten too far ahead of themselves in predicting stellar earnings from companies.
"The market has been pricing in the best-case scenario for earnings for all of these companies," he said. "I think with an earnings report like this six months ago, we would've seen stocks rally."
In early afternoon trading, the Dow fell 138.23, or 1.3 percent, to 10,572.32. The Standard & Poor's 500 index fell 15.57, or 1.4 percent, to 1,132.89, and the Nasdaq composite index fell 33.64, or 1.5 percent, to 2,283.10.
Bond prices rose, pushing their yields lower. The yield on the benchmark 10-year Treasury note fell to 3.67 percent from 3.74 percent late Thursday.
The dollar rose against most major currencies, particularly the euro. That hurt prices of commodities, which are priced in dollars. A stronger greenback makes commodities like oil more expensive to foreign buyers.
Crude oil fell $1.20 to $78.19 per barrel on the New York Mercantile Exchange. Gold prices fell.
Among banks, JPMorgan fell 92 cents, or 2.1 percent, to $43.77. Morgan Stanley fell $1.11, or 3.6 percent, to $30.09, while Citigroup Inc. fell 8 cents, or 2.3 percent, to $3.43.
Three stocks fell for every one that rose on the New York Stock Exchange, where volume came to 782.6 million shares compared with 390.4 million shares traded at the same point Thursday. Trading was heavy Friday because of the expiration of options contracts on some stocks.
The Russell 2000 index of smaller companies fell 11.57, or 1.8 percent, to 634.86.
Britain's FTSE 100 fell 0.8 percent, Germany's DAX index fell 1.9 percent, and France's CAC-40 lost 1.5 percent. Earlier, Japan's Nikkei stock average rose 0.7 percent.
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Augstums reported from Charlotte, N.C.

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