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US: Sell-off in bank shares leads stocks lower

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[NEW YORK] Wall Street stocks finished lower on Friday after a batch of earnings reports from large US banks sparked a selloff in financial shares.

The Dow Jones Industrial Average shed 0.5 per cent to 24,360.14.

The broad-based S&P 500 fell 0.3 per cent to 2,656.30, while the tech-rich Nasdaq Composite Index dropped 0.5 per cent to 7,106.65.

Although earnings from JPMorgan Chase and other large banks bested analyst expectations, the sector had risen in anticipation of the reports and the results - while good - were not strong enough to propel the stocks higher, analysts said.

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"You had a sector selloff in financials," said Art Hogan, chief market strategist at Wunderlich Securities.

"When the group started selling off, it took the whole market with it." "It feels like we just ramped up expectations too much," he added.

JPMorgan Chase, the biggest US bank by assets, reported a 35.1 per cent jump in first-quarter earnings to US$8.7 billion and offered an upbeat outlook on the US economy. Shares still fell 2.7 per cent.

Similarly, Citigroup shed two per cent despite a 13 per cent rise in first-quarter earnings to US$4.6 billion behind higher overall corporate lending and strong gains in equity trading.

Wells Fargo tumbled 3.4 per cent after it reported a 5.7 per cent rise in first-quarter earnings that was overshadowed by a drop in revenues and the announcement that it was in talks with US regulators on a proposed US$1 billion penalty over investigations of automobile and mortgage practices.

Other large banks, including Bank of America and Goldman Sachs, also fell.

Analysts are hoping a successful US corporate earnings season will lift US stocks following a rocky period.

The market has been pressured by fears of a trade war, concerns about higher US interest rates and worries about the Trump administration's prospects following myriad controversies and the near-constant churn of White House staff.

AFP

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