US STOCKS-Wall St dragged down by disappointing bank results

Reuters

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    * JPM tumbles after Q4 report, Citi also falls 
    * Wells Fargo rises after higher profit 
    * Casino stocks up as Macau caps new licenses at six
    * Indexes down: Dow 1.03%, S&P 0.51%, Nasdaq 0.21%    

 (Updates prices, adds commentary, byline)
    By Bansari Mayur Kamdar, Shreyashi Sanyal and Sinéad Carew
    Jan 14 (Reuters) - Wall Street's main indexes fell on Friday
with the biggest drag from the financial sector as investors
were disappointed by financial results from big U.S. banks,
which cast a shadow over the fourth-quarter's earnings season
kick-off.
    Ten of the 11 major S&P 500 sectors were lower in afternoon
trading, with financials  .SPSY  falling 1.6%. The S&P 500 banks
index  .SPXBK  slid 2% after hitting an intraday high in the
previous session.
    JPMorgan Chase & Co  JPM.N  tumbled 6.3% on reporting weaker
performance at its trading arm. The bellwether lender also
warned that soaring inflation, looming threat of Omicron and
trading revenues returning to normal levels are set to challenge
the banking industry's growth in the coming months.  urn:newsml:reuters.com:*:nL4N2TU324
    Citigroup Inc  C.N  was down 1.8% after posting a 26% drop
in fourth-quarter profit, while asset manager BlackRock Inc
 BLK.N  fell 2.5% after missing quarterly revenue expectations.
 urn:newsml:reuters.com:*:nL4N2TU38G  urn:newsml:reuters.com:*:nL4N2TU31F
    "Today's first earnings from the banks came in with varying
cross currents. The major theme was loan demand is still not
strong enough to outpace deposit growth which means banks aren't
in a position to take advantage of the steeper yield curve,"
said Keith Buchanan, portfolio manager at Globalt in Atlanta. 
    Financials have outperformed the broader S&P 500 index
recently on bets that the Federal Reserve's expected interest
rate hikes would boost their profits. 
    And along with data showing December's retail sales decline,
Buchanan said, the banks' performance prompts questions about
the economic outlook for the current quarter and 2022. 
    "The question is, does the economy have enough strength to
get through the risk Omicron brings as fiscal and monetary
stimulus is rolling off," he said.  
    Retail sales dropped 1.9% last month due to shortages of
goods and an explosion of COVID-19 infections.  urn:newsml:reuters.com:*:nL1N2TT2FW
Separate data showed soaring inflation hit U.S. consumer
sentiment in January, pushing it to its second lowest level in a
decade.  urn:newsml:reuters.com:*:nAQN0AXT0P
    By 2:27 p.m. ET (1927 GMT), the Dow Jones Industrial Average
 .DJI  fell 370.49 points, or 1.03%, to 35,743.13, the S&P 500
 .SPX  lost 23.98 points, or 0.51%, to 4,635.05 and the Nasdaq
Composite  .IXIC  dropped 31.26 points, or 0.21%, to 14,775.56. 
  
    After financials consumer discretionary  .SPLRCD  and
healthcare  .SPXHC  were also big drags on the S&P. 
    Analysts see S&P 500 companies earnings rising 23.1% in the
fourth quarter, according to IBES data from Refinitiv. 
    One bright spot in the bank sector on Friday however was
Wells Fargo & Co  WFC.N , which gained 3.3% after posting a
bigger-than-expected rise in fourth-quarter profit.  urn:newsml:reuters.com:*:nL4N2TU2VT
    Casino operators Las Vegas Sands  LVS.N  rose 11% while
Melco Resorts  MLCO.O  advanced 14% and Wynn Resorts  WYNN.O 
was up almost 8% after Macau's government capped the number of
new casino operators allowed to operate to six with an operating
period of up to 10 years.  urn:newsml:reuters.com:*:nP8N2TS00A    
    U.S. stock markets are due to remain shut on Monday for the
public holiday in honor of Martin Luther King. 
    Declining issues outnumbered advancing ones on the NYSE by a
2.92-to-1 ratio; on Nasdaq, a 2.37-to-1 ratio favored decliners.
    The S&P 500 posted 25 new 52-week highs and three new lows;
the Nasdaq Composite recorded 47 new highs and 562 new lows.  

 (Reporting by Bansari Mayur Kamdar and Shreyashi Sanyal in
Bengaluru, Sinéad Carew in New York, Editing by Maju Samuel
Editing by Marguerita Choy)
 ((sinead.carew@thomsonreuters.com))

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