Tech stocks led a decline of the market in morning trading on Thursday as financials struggled to keep gains.
The S&P 500 Index slid 1.16 percent, or 12.74 points to trade at 1084.76 at 11:05 a.m.
Yesterday, the index was trading negative for the day before the 2:15 pm Federal Open Market Committee statement. After the Fed stated that it expected to keep interest rates low for an extended period of time, bank stocks soared.
Both big financial institutions and regional banks made huge gains on this news of continued liquidity as the Dow Jones U.S. Financials Index closed up 2.13 percent and the Dow Jones Industrial Average closed up 0.41 percent.
Today, financials are struggling to hold on to gains. Bank of America (NYSE:BAC) is up 0.05 percent, JPMorgan (NYSE:JPM) down 1.07 percent, Goldman Sachs (NYSE:GS) up 0.22 percent. Citigroup (NYSE:C) leads big banks with a gain of 1.41 percent.
Some regional banks are up more than big Wall Street firms on hopes that Washington may step up efforts to provide funding for small businesses. Regions Financial (NYSE:RF) is up 1.78 percent and Huntington (NASDAQ:HBAN) is up 2.87 percent.
Technology stocks lead the decline. Apple (NASDAQ:AAPL), which launched its highly anticipated iPad yesterday, is trading down 4.2 percent. Motorola (NYSE:MOT) and Qualcomm (NASDAQ:QCOM) reported earnings that beat estimates, but both companies plunged. Motorola is down 10.95 percent and Qualcomm is down 13.41 percent.
Asian markets closed up and European markets gained in early trading after President Barack Obama's State of the Union address last night, although most indices are now in the negative. Banks such as Barclays (LON:BARC) and HSBC (LON:HSBA) led the rally earlier in the European session for the UK FTSE 100.
Investors scrutinized Obama's highly anticipated State of the Union address last night for the extent of Wall Street bashing and his stance on bank reforms.
While Obama said he absolutely hated his involvement in bailing out banks, he said that unemployment could be double the current 10 percent figure if the banks were allowed to fail.
Obama said he is not interested in punishing banks. Banks will be essential for the economic recovery because they help businesses create jobs. Job creation will be the number one priority for the administration in 2010, he said.
The President also applauded the stimulus bill, or the Recovery Act, for creating jobs. He credits his tax cuts for encouraging spending among middle class families. Obama also reiterated that his spend freeze will not take effect until next year, addressing fears of fiscal tightening in the immediate future.
Last night, the President introduced a proposal to take $30 billion of the money collected from Wall Street and give it to community banks in an effort to extend loans to small businesses. He credits small businesses with creating most new jobs.
The President briefly made references to regulating banks against recklessness and taking risks that threaten the whole economy, although he made no direct remarks on the Volcker Rule and Wall Street bashing was not a focal point of his address.
Fed Chairman Ben Bernanke's confirmation vote is scheduled for today. He is expected to receive the 60 votes needed for a filibuster-proof confirmation; His second term is seen as favorable by Wall Street.