Rising loan losses at JPMorgan Chase & Co.'s consumer bank and a disappointing reading on consumer sentiment sent investors rushing from stocks Friday.
Major stock indexes fell about 1 percent, including the Dow Jones industrial average, which lost 105 points.
JPMorgan, regarded as one of the strongest U.S. banks, warned investors that it was too soon to say that losses on mortgages and other loans have peaked. The weakness in JPMorgan's consumer business hurt other financial stocks, which led the rest of the market lower.
Investors took little solace from a much stronger than expected profit report late Thursday from Intel Corp., the biggest maker or computer chips.
Commodity prices slumped as the dollar turned higher, and a disappointing report on consumer sentiment also weighed on the market. The preliminary Reuters/University of Michigan consumer sentiment index rose to 72.8 from 72.5 in late December but came in weaker than economists had forecast.
Adam Gould, senior portfolio manager at Direxion Funds in New York, said the reaction to JPMorgan's report signaled that investors had gotten too far ahead of themselves in predicting stellar earnings from companies.
"The market has been pricing in the best-case scenario for earnings for all of these companies," he said. "I think with an earnings report like this six months ago, we would've seen stocks rally."
In late morning trading, the Dow fell 106.26, or 1 percent, to 10,604.29. The Standard & Poor's 500 index fell 11.45, or 1 percent, to 1,137.01, and the Nasdaq composite index fell 21.76, or 0.9 percent, to 2,294.98.
Bond prices rose, pushing their yields lower. The yield on the benchmark 10-year Treasury note fell to 3.66 percent from 3.74 percent late Thursday.
Crude oil fell 80 cents to $78.59 per barrel on the New York Mercantile Exchange. Gold prices fell.
Among banks, JPMorgan fell $1.05, or 2.4 percent, to $43.64. Morgan Stanley fell 93 cents, or 3 percent, to $30.27, while
Citigroup Inc. fell 8 cents, or 2.3 percent, to $3.43.
About four stocks fell for every one that rose on the
New York Stock Exchange, where volume came to 589.4 million shares compared with 242.8 million shares traded at the same point Thursday. Trading was heavy Friday because of the expiration of options contracts on some stocks.
The Russell 2000 index of smaller companies fell 8.71, or 1.4 percent, to 637.72.
In afternoon trading, Britain's FTSE 100 fell 0.7 percent, Germany's DAX index fell 1.9 percent, and France's CAC-40 fell 1.5 percent. Earlier, Japan's Nikkei stock average rose 0.7 percent.
