U.S. stocks fell on Friday as several banking companies weighed down the major indexes on the final day of an otherwise strong week for equities.
The Dow Jones industrial average fell 122.91 points to close at 24,360.14, with J.P. Morgan Chase as the worst-performing stock in the index. The S&P 500 closed 0.3 percent lower at 2,656.30 as financials dropped 1.6 percent. The Nasdaq composite declined 0.5 percent to 7,106.65. The indexes opened sharply higher on the back of strong earnings from some of the big banks.
Citigroup, Wells Fargo and J.P. Morgan Chase all reported quarterly earnings and revenue that surpassed analyst expectations. Bank shares initially traded higher before falling, as the strong results were already priced in. The SPDR S&P Bank ETF (KBE) fell 1.6 percent, while J.P. Morgan dropped 2.7 percent.
Expectations for this earnings season are high, especially for financials. According to FactSet, S&P 500 earnings are forecast to have grown by 17.1 percent last quarter. Financials, meanwhile, are expected to see earnings increase by 24 percent. Bank of America, Goldman Sachs and Morgan Stanley are all scheduled to report next week.
“I don’t see how they don’t do well,” said Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research, regarding financials during the earnings season. “You’ve got rates rising as well as higher market volatility, so they should benefit from that.”
So far, the earnings season is off to a good start, according to Nick Raich, CEO of The Earnings Scout. In a note to clients, he said earnings growth thus far totals 26.8 percent for the first quarter.
“In nearly 25 years of compiling earnings data, we have never measured this much growth this late in the cycle,” said Raich. “The Tax Cuts and Jobs Act is a major reason why we are seeing such growth.”
Despite Friday’s decline, the major averages posted strong gains for the week. The Dow and S&P 500 rose 1.8 percent and 2 percent this week, respectively, while the Nasdaq advanced 2.8 percent.
The moves Friday come after Wall Street finished its previous session in the black. On Thursday, the Dow gained 293.60 points to close at 24,483.05, after President Donald Trump clarified his position on a possible missile attack in Syria.
Markets have been on edge in recent days after Trump appeared to criticize the Kremlin for its supporting Syrian President Bashar Assad, following a suspected chemical attack last weekend.
Concerns about a trade war with China are also lingering. The Wall Street Journal reported, citing officials familiar with the matter, that the Trump administration is planning to ratchet up the trade pressure on China through new tariffs and by threatening to block Chinese technology investment in the United States. The S&P 500 has fallen more than 3 percent over the past month.
In economic news, the University of Michigan’s consumer sentiment index ticked down to 97.8 in April from 101.4 in March.