Earnings drop at JPMorgan drags bank stocks lower

BERNARD CONDON AP Business Writer Published:

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

KEEPING SCORE: The S&P 500 fell 12 points, or 0.7 percent, to 1,820 as of 2:16 p.m. Eastern time. The Dow Jones industrial average fell 128 points, or 0.8 percent, to 16,042. The Nasdaq composite index dropped 36 points, or 0.9 percent, to 4,017.

BANK EARNINGS: JPMorgan Chase fell $1.79, or 3 percent, to $55.61 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 83 cents, or 1.7 percent, to $48.54 after it beat earnings estimates.

RETAILER ROUT: Gap fell 88 cents, or 2 percent, to $38.41. 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. Gilead Sciences rose $1.64, or 2.5 percent, to $67.13, 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 drive stocks higher after the S&P 500 gained nearly 30 percent last year. Financial analysts expect first-quarter earnings S&P 500 companies to drop 1.6 percent from a year earlier, according to a report released Friday from FactSet, a financial data provider. At the start of the year, they expected a jump of 4.3 percent.

If profits do fall, 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 10 cent, up 0.6 percent, to $15.73 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.

In IPO news, Zoe's Kitchen, a restaurant chain, rose 66 percent in its trading debut, jumping $10.13 to $25.13.

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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AP Market Writer Steve Rothwell contributed to this report.