FOX Business: The Power to Prosper
Financial shares led Wall Street into the red on Thursday after banking-giant JPMorgan Chase posted a decline in its quarterly profits, sparking worries over how the rest of the sector fared last quarter.
As of 12:15 p.m. ET, the Dow Jones Industrial Average fell 106 points, or 0.92%, to 11,413, the S&P 500 dipped 12.6 points, or 1%, to 1,195 and the Nasdaq Composite slid 4.7 points, or 0.18%, to 2,600.
Earnings season kicked into high-gear this week, with aluminum-giant Alcoa (NYSE:AA) posting anemic results. JPMorgan Chase (NYSE:JPM), the first of the major banks to report, earned $4.3 billion, or $1.02 a share, in the third quarter, topping estimates of 91 cents a share, but weaker than the $4.4 billion from the same period last year. JPMorgan shares were off more than 4%, putting considerably pressure on other banks like Bank of America (NYSE:BAC) and Citigroup (NYSE:C).
Energy shares were also sharply lower, while technology and consumer-discretionary shares outperformed the broader markets.
The markets had been on a roll recently; indeed, the blue chips have soared more than 8% in the past seven days, nearly climbing into the black for the year in the prior session before pulling back. The broader S&P 500 is on a three-day winning streak, and surged close to 10% in the past seven days.
Traders have been reacting to developments on the European front, specifically signals that policymakers are ready to act to recapitalize the region's banking sector, which has taken a strong hit from the sovereign debt troubles on that side of the Atlantic.
However, sentiment was dimmed to some extent on Thursday by commentary from the European Central Bank suggesting pushing bondholders to take so-called haircuts on Greek debt as part of a bailout package could threaten already weak European banks. Additionally, a tepid bond auction of Italian debt was a cause for concern, according to analysts at Nomura.
The euro recently fell 0.42% to $1.37, while the greenback rose 0.23% against a basket of world currencies.
The U.S. trade deficit fell slightly to $45.61 billion in August from $45.63 billion the prior month, while the gap with China hit an all-time high. The deficit, which is calculated by subtracting imports from exports, weighs directly into broader measures of economic growth. The larger the trade deficit, the more it weighs on Gross Domestic Product.
Meanwhile, data released earlier showed Chinese exports climbed 17.1% last month from the year before, a much slower pace than the 24.5% in August. Meanwhile, the world's second biggest economy showed import growth of 20.9%, also weaker than 30.2% in August.
The slowdown in China, a critical economy, echoes concerns that the global economic recovery has stalled, and policymakers may be running out of tools to jump-start it.
The number of individuals filing for first-time unemployment benefits fell slightly to 404,000 from 405,000 the week prior, just below estimates of 405,000. While the weekly data tend to be volatile, market participants have been paying particularly close attention to the labor market that has only slowly recovered from the recession.
Energy markets were in the red amid a strengthening dollar, concerns over demand from China, and selling in equity markets.
Light, sweet crude fell $1.73, or 2%, to $83.85 a barrel. Wholesale RBOB gasoline dipped 2 cents, or 0.59%, to $2.73 a gallon.
In metals, gold fell $19.70, or 1.2%, to $1,663 a troy ounce. Treasury yields fell: the benchmark 10-year note yields 2.191% from 2.212%.
Research in Motion (NASDAQ:RIMM) shares were under selling pressure for a second day as the company struggles with a global outage of its flagship BlackBerry e-mail service.
The Euro Stoxx 50 slid 1.7% to 2,333, the English FTSE 100 dipped 0.71% to 5,403 and the German DAX tumbled 1.3% to 5,915.
In Asia, the Japanese Nikkei 225 climbed 0.97% to 8,823 and the Chinese Hang Seng soared 2.3% to 18,758.