US: Stocks retreat from records; banks, media shares weak

[NEW YORK] Wall Street stocks retreated from records Thursday as investors soured on financial shares following earnings from large banks, a sector that has risen significantly this year.

Both JPMorgan Chase and Citigroup reported better-than-expected profits, but the financial sector was one of the worst performing groups.

"There has been much optimism baked into the market" on bank earnings, said Lindsey Bell, investment strategist at CFRA Research, who suggested in a note that shareholders hold or trim bank stocks.

The Dow Jones Industrial Average lost 0.1 per cent at 22,841.01.

The broad-based S&P 500 dropped 0.2 per cent to 2,550.93, while the tech-rich Nasdaq Composite Index shed 0.2 per cent to 6,591.51.

All three indices ended at records Wednesday.

Citigroup fell 3.4 per cent despite reporting a seven percent rise in profits to US$4.1 billion. Analysts expressed concerns about higher reserves set aside for bad loans and about a weak trading performance.

JPMorgan dropped 0.9 per cent after reporting a seven percent rise in profits to $6.7 billion.

AT&T sank 6.1 per cent as it confirmed many of its full-year financial targets, but said it expects a hit of US$210 million in pre-tax earnings in the third quarter due to US hurricanes and earthquakes in Mexico.

AT&T also said it expects a drop of 90,000 in total US video subscribers as more consumers shun traditional cable packages in favour of streaming and other "over-the-top" services.

Charter Communications fell 2.6 per cent and Viacom lost 3.4 per cent following reports that the two sides are clashing over contract terms for broadcasts of MTV and other Viacom networks as Charter seeks more streaming broadcasts.

Other media shares were weak, including Disney and Comcast, both of which lost more than one percent.

AFP