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Dow closes lower after disappointing bank results

01/14/2022 | 04:01pm EDT

Jan 14 (Reuters) - The Dow closed lower with a big drag from financial stocks as investors were disappointed by fourth quarter results from big U.S. banks, which cast a shadow over the earnings season kick-off.

The Nasdaq and the S&P regained lost ground in afternoon trading to close higher. Meanwhile the consumer discretionary also put pressure on major indexes after morning data showed a December decline in retail sales and a souring of consumer sentiment. JPMorgan Chase & Co tumbled after reporting weaker performance at its trading arm. The bellwether lender also warned that soaring inflation, the looming threat of Omicron and trading revenues would challenge industry growth in coming months.

Along with JPMorgan, big decliners putting pressure on the Dow included Goldman Sachs, American Express and Home Depot.

Citigroup Inc shares fell after it reported a 26% drop in fourth-quarter profit, while asset manager BlackRock Inc fell after missing quarterly revenue expectations.

The earnings kick-off had investors taking profits in the S&P 500 bank subsector after it had hit an intraday high in the previous session. Financial stocks had been outperforming the S&P recently as investors bet that the Federal Reserve's expected interest rate hikes will boost bank profits.

"The bar was very high going into (JPMorgan) results. On the surface it was good but, under the hood, not so much," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. In the interest rate hiking cycle expected this year "positioning was very crowded on the long side" going into the earnings season.

For consumer stock weakness, James pointed to "clearly disappointing" retail sales, which dropped 1.9% last month due to shortages of goods and an explosion of COVID-19 infections. Separate data showed soaring inflation hit U.S. consumer sentiment in January, pushing it to its second lowest level in a decade.

Retail sales and bank loan growth raised doubts about the economic outlook for the current quarter and 2022 for Keith Buchanan, portfolio manager at Globalt in Atlanta.

"The question is, does the economy have enough strength to get through the risk Omicron brings as fiscal and monetary stimulus is rolling off," Buchanan said.

According to preliminary data, the S&P 500 .SPX> gained 2.89 points, or 0.06%, to end at 4,661.92 points, while the Nasdaq Composite gained 81.98 points, or 0.55%, to 14,889.73. The Dow Jones Industrial Average fell 208.43 points, or 0.58%, to 35,905.19.

Analysts see S&P 500 companies earnings rising 23.1% in the fourth quarter, according to IBES data from Refinitiv.

One bright spot in the bank sector on Friday however was Wells Fargo & Co, which gained ground after posting a bigger-than-expected rise in fourth-quarter profit.

Casino operators Las Vegas Sands, Melco Resorts and Wynn Resorts rallied after Macau's government capped the number of new casino operators allowed to operate to six for a period of 10 years.

U.S. stock markets will remain shut on Monday for the public holiday in honor of Martin Luther King. (Additional reporting by Bansari Mayur Kamdar and Shreyashi Sanyal in Bengaluru, Sinéad Carew in New York, Editing by Maju Samuel and Marguerita Choy)

ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
BLACKROCK, INC. 2.19% 611.72 Delayed Quote.-34.62%
DJ INDUSTRIAL 1.34% 32654.59 Real-time Quote.-11.32%
ON SEMICONDUCTOR CORPORATION 6.07% 58.5 Delayed Quote.-18.80%
WYNN RESORTS, LIMITED 3.85% 66.4 Delayed Quote.-24.81%
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Financials (USD)
Sales 2022 4 365 M - -
Net income 2022 -420 M - -
Net Debt 2022 7 903 M - -
P/E ratio 2022 -18,2x
Yield 2022 -
Capitalization 7 357 M 7 357 M -
EV / Sales 2022 3,50x
EV / Sales 2023 2,49x
Nbr of Employees 26 950
Free-Float 80,1%
Duration : Period :
Wynn Resorts, Limited Technical Analysis Chart | WYNN | US9831341071 | MarketScreener
Technical analysis trends WYNN RESORTS, LIMITED
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus OUTPERFORM
Number of Analysts 15
Last Close Price 66,40 $
Average target price 91,00 $
Spread / Average Target 37,0%
EPS Revisions
Managers and Directors
Craig S. Billings Chief Executive Officer & Director
Philip Glen Satre Non-Executive Chairman
Patricia Mulroy Independent Director
Clark T. Randt Independent Director
Betsy S. Atkins Independent Director
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