Financials drag stocks lower

October 13, 2011: 4:38 PM ET
u.s. stock market

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NEW YORK (CNNMoney) -- U.S. stocks ended mixed Thursday, as investors took a breather from the recent rallies and turned cautious after a lackluster earnings report from JPMorgan Chase.

The Dow Jones industrial average (INDU) dropped 41 points, or 0.4%, and the S&P 500 (SPX) fell 4 points, or 0.3%. Financials were among the big losers, as JPMorgan Chase (JPM, Fortune 500) and Bank of America (BAC, Fortune 500) dragged on the Dow with shares falling about 5%. Citigroup (C, Fortune 500) and Morgan Stanley (MS, Fortune 500) also sank.

Meanwhile, technology stocks were among the strongest performers. The tech-heavy Nasdaq composite (COMP) was up 16 points, or 0.6%, with Nvidia (NVDA) and Micron Technology (MU, Fortune 500) gaining between about 6%.

After the closing bell, Google (GOOG, Fortune 500) reported third-quarter earnings that handily beat estimates, and said that its Google+ social network now has 40 million users. Shares spiked more than 5% in after-hours trading.

But throughout the trading day, JPMorgan's earnings results weighed on the market. The bank reported profit and revenue figures that topped Wall Street estimates, but fell from a year earlier. Investors were disappointed as CEO Jamie Dimon said the investment bank is being "extremely cautious, while navigating through this challenging economic environment."

"It's a difficult environment for banks to make money," said Dave Hinnenkamp, CEO at KDV Wealth Management. "The banking sector is facing a lot of headwinds, considering what's happening in Europe."

He added that while U.S. banks are well capitalized and in much better shape than they were in 2008, "they are still sensitive to the headlines."

JPMorgan 'cautious' as income dips

Europe's ongoing debt troubles have been weighing on Wall Street for months. A survey by CNNMoney shows that 80% of the experts agree that the most challenging hurdle for the stock market is the eurozone debt crisis.

On Thursday, Slovakia became the final euro area country to ratify overhauling the European Financial Stability Facility (EFSF), which is essentially a bailout for Greece and other troubled eurozone countries.

The approval was widely expected, after it had previously voted the measure down earlier this week.

Later this week, finance ministers from the world's leading economies will meet to discuss ways to strengthen the faltering global recovery, focusing on the European debt crisis.

Weaker-than-expected trade data from China also spooked investors, amid mounting concerns about a global economic slowdown. While Chinese exports were up 17.1% in September from a year earlier, that was weaker than the 24.5% annual increase in the previous month and below most forecasts, according to reports.

With little other news to lift the mood on Wall Street, investors hit the pause button after solid gains over the last week.

On Wednesday, stocks finished sharply higher, as investors grew optimistic about a resolution for Europe's debt crisis, after European Commission President Jose Manuel Barroso announced a plan to recapitalize European banks.

Wednesday's advance was the sixth out of the last seven days for the S&P 500 and Nasdaq, and fifth for the Dow. The three major indexes are up between 8% and 11% since Oct. 3, when stocks hit their lowest levels in more than a year.

Companies: Research in Motion (RIMM) shares continued to struggle, after the BlackBerry-maker company's worst-ever outage that started in Europe on Monday. RIM said BlackBerry service has been fully restored worldwide Thursday morning.

Apple's (AAPL, Fortune 500) stock ticked higher. The company's iPhone 4S goes on sale in Apple stores Friday, as well Sprint (S, Fortune 500), Verizon (VZ, Fortune 500) and AT&T (T, Fortune 500) locations and select Best Buy (BBY, Fortune 500), Target (TGT, Fortune 500) and Wal-Mart (WMT, Fortune 500) stores. The pre-order of the iPhone 4S was wildly successful, topping 1 million sales in 24 hours.

Raj Rajaratnam, former manager of the the defunct hedge fund Galleon Group, was sentenced on Thursday to 11 years in federal prison and fined $10 million for insider trading.

Congress passes trade deals

Economy: First-time filings for unemployment benefits fell 1,000 to 404,000, according to the government's weekly report. Economists were expecting 406,000 initial jobless claims. Continuing claims slipped to 3.67 million, slightly below estimates for 3.7 million ongoing claims.

The U.S. trade deficit remained unchanged at $45.6 billion in August.

World markets: European stocks ended lower. Britain's FTSE 100 (UKX) lost 0.7%, the DAX (DAX) in Germany shaved 1.3% and France's CAC 40 (CAC40) slid 1.5%.

Asian markets ended higher. The Shanghai Composite (SHCOMP) ticked up 0.8%, the Hang Seng (HSI) in Hong Kong jumped 2.3% and Japan's Nikkei (N225) added 1%.

Currencies and commodities: The dollar gained against the euro and British pound, but slipped against the Japanese yen.

Peanut butter prices get nutty - StockTwits

Oil for November delivery dropped $1.34 to settle at $84.23 a barrel.

Gold futures for December delivery fell $14.10 to settle at $1,668.50 an ounce.

Bonds: The price on the benchmark 10-year U.S. Treasury edged slightly higher, pushing the yield down to 2.18% from 2.23% late Wednesday.  To top of page

Index Last Change % Change
Dow 16,808.17 3.46 0.02%
Nasdaq 4,429.82 7.73 0.17%
S&P 500 1,945.86 -0.30 -0.02%
Treasuries 2.42 0.01 0.62%
Data as of 1:33pm ET
Company Price Change % Change
Bank of America Corp... 16.90 0.08 0.48%
Apple Inc 99.40 0.22 0.23%
Facebook Inc 77.21 0.66 0.86%
Ford Motor Co 14.45 -0.14 -0.94%
Intel Corp 33.66 -0.33 -0.98%
Data as of 1:18pm ET
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.08%4.12%
15 yr fixed3.23%3.21%
5/1 ARM3.46%3.30%
30 yr refi4.14%4.12%
15 yr refi3.28%3.21%
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