NEW YORK: Wall Street’s main indexes slid for the second straight day on Wednesday, with bank stocks retreating after mixed results from Bank of America, Wells Fargo, and Citigroup, while selling also spread to market-leading tech and growth stocks.
Wells Fargo shares dropped 5.6 percent after missing fourth-quarter profit expectations. Bank of America and Citigroup both topped quarterly profit estimates, but their shares fell nearly 5 percent and 3 percent, respectively.
“We’re seeing slight misses on some of the estimates, but these stocks had strong run-up into these reports, and it’s not unusual to see a little bit of a pullback,” said Jake Johnston, deputy CIO, Advisors Asset Management.
The S&P 500 bank index slumped 2.5 percent to hit a five-week low, deepening losses this week stemming from concerns over a proposed ceiling on credit-card interest rates that JPMorgan executives warned could squeeze consumers and dent profitability across the financial sector.
Shares of Broadcom shed 4.4 percent, Palo Alto Networks dropped 1.5 percent and Fortinet fell 2.2 percent after a Reuters report said Chinese authorities have told domestic companies to stop using cybersecurity software made by roughly a dozen US and Israeli firms.
The financials index fell 2.1 percent and technology dropped 1.9 percent, the most among S&P sectors.
At 11:15 a.m. ET, the Dow Jones Industrial Average fell 229.72 points, or 0.47 percent, to 48,962.27, the S&P 500 lost 64.76 points, or 0.93 percent, to 6,898.98 and the Nasdaq Composite lost 350.09 points, or 1.48 percent, to 23,359.78.
Early signs of a rally broadening beyond market-leading technology and growth stocks emerged again Wednesday, as bargain hunters moved into less favored sectors.
The energy index continued to climb for the second consecutive day, up nearly 1.8 percent, as oil prices strengthened, while defensive sectors including consumer staples , real estate and utilities were also in the green. “We’re due for those 490 stocks to outperform those top 10 huge ones that are tech,” said Eric Diton, managing director of the Wealth Alliance, about S&P 500 companies.
“It certainly could happen this year. But no one blows a whistle and says it’s time. We just have to see.”
Producer prices in the US matched forecasts in November, but retail sales topped expectations, following data a day earlier showing December consumer prices rose as projected.
Interest rates are widely expected to hold steady through the first half of the year, including at the Fed’s January meeting, with traders pricing in at least two cuts before year-end, according to LSEG data. So far, markets have largely overlooked geopolitical risks such as the US toppling Venezuela’s leader, or threatening to take over Greenland as enthusiasm around artificial intelligence and fourth-quarter results drove S&P 500 and the Dow to new peaks just this week.
The US Supreme Court issued three decisions on Wednesday but did not decide the closely watched dispute over the legality of President Donald Trump’s global tariffs.
Advancing issues outnumbered decliners by a 1.24-to-1 ratio on the NYSE and matched them on the Nasdaq.
The S&P 500 posted 29 new 52-week highs and five new lows, while the Nasdaq Composite recorded 84 new highs and 68 new lows.
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