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Stocks close lower after bank sector gives up early gains

CNBC logo CNBC 4/13/2018 Fred Imbert and Alexandra Gibbs

Stocks slipped Friday as several banking companies weighed down the major indexes on the final day of an otherwise strong week for equities.

The Dow ended 122 points lower, with J.P. Morgan Chase lagging. The S&P 500 gave up 0.29 percent, and the Nasdaq slid 0.47 percent. The indexes had 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 more than 1 percent, as the strong results were already priced in.

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 release earnings next week.

So far, the earnings season is off to a good start, according to Nick Raich, the 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," Raich said. "The Tax Cuts and Jobs Act is a major reason why we are seeing such growth."

Bank of America, Goldman Sachs and Morgan Stanley are all scheduled to release earnings next week.

Despite Friday's decline, the major averages posted strong gains for the week.

The moves Friday come after Wall Street finished its previous session in the black. On Thursday, the Dow gained 293 points to close at 24,483 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 after 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.

Trade fears have plagued investors recently, with the S&P 500 falling 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.


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