Wall Street capped a strong week on a down note on Friday as investors booked profits in the wake of the recent upward surge and bank shares dropped after bank executives indicated March had been a tougher month for the industry than the previous two.
After a meeting with President Barack Obama, JPMorgan Chase & Co's
Bank of America Corp's
The gloomy comments on bank profits contrasted with statements earlier in the month that had helped push the broad S&P 500 index up more than 20 percent since it hit a 12-year low on March 9.
The change in mood on banks compounded a sell-off as investors booked profits created during the recent run-up. Heading into the day's session, the S&P 500 was at its most overbought position since May 2008, according to its 50-day relative strength index.
Given that's kind of where this rally started in the second week of the month with Citigroup and Bank of America indicating they had a good first two months (of 2009), it would make sense that his comments would have a negative impact, said Peter Jankovskis, director of research at OakBrook Investments LLC in Lisle, Illinois.
Citigroup fell 6.8 percent to $2.62 while JPMorgan Chase shed 5.8 percent to $27.40. The KBW bank index <.BKX> fell 3.28 percent on the day, but the index remains up nearly 56 percent from its March 6 low.
The Dow Jones industrial average <.DJI> fell 148.38 points, or 1.87 percent, to 7,776.18. The Standard & Poor's 500 Index <.SPX> shed 16.92 points, or 2.03 percent, to 815.94. The Nasdaq Composite Index <.IXIC> slid 41.80 points, or 2.63 percent, to 1,545.20.
For the week, the blue-chip index rose 6.8 percent, the S&P 500 gained 6.2 percent and the Nasdaq rose 6 percent.
The Dow is up 10.1 percent for the month but remains down 11.4 percent year-to-date.
The S&P 500 is still down nearly 10 percent this year and has shed 47.9 percent since hitting its all-time high in October 2007.
Tumbling oil prices sank energy shares as well, putting Exxon Mobil
Exxon Mobil and Chevron both fell nearly 2 percent as U.S. crude futures fell 3.6 percent to $52.38 per barrel amid economic concerns and a stronger U.S. dollar, after closing at a four-month high on Thursday.
Stocks had rallied amid increasing optimism that the worst of the current downturn might be over as well as government action geared at stabilizing the ailing financial system.
Gains on Thursday had helped push the Nasdaq back into positive territory in the year-to-date, but a decline in big-cap technology shares pulled the index back in the red on Friday.
Shares of Intel
Other standout decliners were Apple
A drop in commodities prices weighed on stocks in the materials sector, and aluminum producer Alcoa
Trading volume was moderate on the New York Stock Exchange, with about 1.44 billion shares changing hands, below last year's estimated daily average of 1.49 billion. On Nasdaq, about 2.09 billion shares traded, below last year's daily average of 2.28 billion.
Declining stocks outnumbered advancing ones on the NYSE by 2,324 to 720 while decliners beat advancers on the Nasdaq by about 2,055 to 658.