Dow Tumbles as Bank Stocks Struggle

Major bank stocks declined after their earnings reports on Friday, weighing on the U.S. markets as Wall Street notched a second straight negative week to start the year.

The Dow Jones Industrials plummeted 201.81 points to 35,911.81, for a weekly loss of 320 points, or 0.9%.

The S&P 500 nicked ahead 3.82 points Friday to 4,662.85, but lost 14 points on the week.

The NASDAQ Composite moved into positive ranks 86.94 points on the day to 14,893.75, but surrendered 42 points on the week.

U.S. markets will be closed Monday for Martin Luther King Day.

Bank stocks, which had outperformed in recent weeks as interest rates moved higher, were broadly lower as their reports appeared to underwhelm investors despite strong headline numbers.

JPMorgan Chase, the number-one U.S. bank by assets, showed profit and revenue that topped estimates, but shares fell more than 6%. The company’s earnings were helped by a large credit reserve release, and CFO Jeremy Barnum warned that the company would likely miss a key profit target in the next two years.

Citigroup’s stock fell 1.3% after the bank beat revenue estimates but showed a 26% decline in profits. Shares of Morgan Stanley and Goldman Sachs, which report next week, also declined.

Meanwhile, shares of Wells Fargo added 3.7% after the bank’s revenue topped expectations. CEO Charles Scharf said in a release that loan demand picked up in the second half of the year.

Shares of Netflix jumped more than 1% after announcing a price increase for U.S. and Canadian subscribers, helping the NASDAQ outperform on Friday.

Casino stocks were another bright spot on Friday after Macau’s government announced it would allow just six casino licenses in the gambling hub. Las Vegas Sands surged 14%, while Wynn Resorts gained 8.6%. Oil stocks also outperformed as crude prices rose.

Consumer discretionary stocks were under pressure after the report, with Bath & Body Works and Under Armour falling more than 2%.
Shares of Peloton fell 2.6% after Nasdaq announced that the stock would be dropped from the NASDAQ index.

Elsewhere, shares of paint maker Sherwin-Williams lost 2.8% after the company warned that fourth-quarter earnings would miss estimates, citing issues in sourcing materials and staffing during the omicron surge. Money-management behemoth BlackRock posted earnings that beat on bottom-line earnings but missed slightly on top-line revenue. Shares fell 2.2%.

On the data front, retail sales were down 1.9% in December, a worse reading than the 0.1% drop expected by economists surveyed by Dow Jones. Industrial production also disappointed, declining 0.1% compared to a projected 0.2% gain.

Retail stocks were under pressure after the report, with Bath & Body Works falling more than 3%.

In other data news, business inventories for November came in higher than expected, but January’s consumer sentiment reading from the University of Michigan came in lower than expected.

Prices for 10-year Treasurys faded sharply, raising yields to 1.79% from Thursday’s 1.70%. Treasury prices and yields move in opposite directions.

Oil prices jumped $2.14 to $84.26 U.S. a barrel.

Gold prices fell $4.70 to $1,816.70 U.S. an ounce.