By Victor Reklaitis, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks dropped again Friday after
the prior session's sharp selloff, weighed down by a disappointing
earnings report from J.P. Morgan Chase & Co. and further
selling in tech names.
Better-than-expected profit from another banking giant, Wells
Fargo & Co., helped to keep losses in check. Sentiment also got
a boost from bigger-than-expected rises for gauges that track
inflation and how consumers feel about the health of the
economy.
The S&P 500(SPX) was last down 10 points, or 0.5%, to 1,823,
putting the benchmark on pace for a weekly drop of 2.3%. The Dow
Jones Industrial Average (DJI) shed 103 points, or 0.6%, to 16,067,
leaving it with a weekly decline of 2.1%.
The Nasdaq Composite(RIXF) fell 33 points, or 0.8%, to 4,022.
The tech-laden index, which on Thursday endured its biggest one-day
percentage drop since November 2011, is on track for a drop for the
week of 2.6%. Notable Nasdaq losers on Friday included Facebook
Inc.(FB), down 0.8%; Netflix Inc.(NFLX), off 2.7%; and Apple(AAPL),
slipping 1%.
Traders on Thursday brushed aside an upbeat report on weekly
jobless claims, and went after biotech and other high-growth stocks
with a vengeance, driving the Nasdaq to a 3.1% fall. The S&P
500 dropped 2.1%, falling below its 50-day moving average.
On Friday, shares in J.P. Morgan (JPM) lost 3.4% after the
banking giant reported first-quarter earnings below market
expectations, while Wells Fargo (WFC) rose 0.5% after its quarterly
profit beat forecasts.
In U.S. economic news, the Labor Department said the
producer-price index gained 0.5% in March, topping the 0.1%
increase seen by economists polled by MarketWatch. The Federal
Reserve wants inflation to rise, but the central bank hasn't had
much success in nudging it higher, so officials likely welcomed
Friday's news on wholesale prices.
A consumer sentiment gauge rose to a preliminary April reading
of 82.6, beating expectations. Economists polled by MarketWatch had
expected a preliminary April level of 80.8 for the sentiment index
from the University of Michigan and Thomson Reuters.
Debate over what's next
Some market watchers see further pain for stock investors, but
others have stayed bullish. The sharp slide that started in
so-called momentum stocks has many talking about a shift in
leadership to value from growth now that the current bull market is
more than five years old.
Follow MarketWatch's live blog of Friday's action
"While the market is roughly flat for the year, the recent
leadership rotation is causing understandable angst for many
investors," said Jonathan Golub, chief U.S. market strategist at
RBC Capital Markets, in emailed comments Friday. "We remain
comfortable with our 2,075 S&P 500 target and cyclical sector
bias including overweights in Financials, Industrials,
Discretionary and Health Care."
Golub argued that fundamentally, nothing has changed.
"We would be more apt to change this outlook if we saw signs of
either fundamental deterioration in the economy or indications that
Fed policy was negatively impacting markets," he said in his note.
"Neither of these conditions are present, in our view."
On the other hand, technical analyst Jonathan Krinsky warned
against "assuming the low is in." Looking at futures for the
S&P 500 (SPM4), he sees the potential for a move down to 1,793.
Krinsky, chief market technician at MKM Partners, wrote in a note
Friday that "to us it still doesn't feel as if THE low is in."
(Read more: These are heady times for broken clocks
http://blogs.marketwatch.com/need-to-know/2014/04/11/bank-earnings-a-nikkei-death-cross-and-broken-clocks-rejoice/.)
Thursday's sharp selloff for Wall Street markets triggered heavy
selling elsewhere. In Tokyo, the Nikkei 225 index slid 2.4%,
hitting a low for the year so far. The Stoxx Europe 600 was down
nearly 2%, headed for a loss of more than 3% on the week.
Across other markets, oil prices (CLK4) moved higher, while the
dollar gained against its major rivals. Gold (GCM4) edged
lower.
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