Wall Street drops as JPMorgan, Citi, Wells Fargo erase pre-market gains

Wall Street major indexes fell on Friday morning, erasing all their gains coming out of the opening bell as JPMorgan led a sharp reversal in financial stocks.

JPMorgan dropped 1.7 percent after its profit missed estimates as lower investment banking revenue offset gains from higher interest rates and a jump in trading revenue.

Shares of Wells Fargo also shed premarket gains to drop 2.9 percent after the bank said it may have to pay a penalty of $1 billion to resolve investigations.

Citigroup also reversed course to trade 1.8 percent lower after its results.

The S&P 500 banks index was down 1.98 percent.

"A lot of it (earnings expectations) has been baked in and that's is the real critical test for the markets," said Scott Brown, Chief Economist at Raymond James in St. Petersburg, Florida.

"This has not been the typical pre-earnings season where you're talking down expectations. There is some potential for disappointment at the same time there is also lot of hope that these numbers are going to meet expectations."

Tax cuts are expected to help corporate America post its biggest quarterly profit growth in seven years. Earnings at the S&P 500 companies are estimated to grow by 18.4 percent from a year earlier.

At 10:29 a.m. ET, the Dow Jones Industrial Average was down 51.36 points, or 0.21 percent, at 24,431.69, the S&P 500 was down 5.47 points, or 0.21 percent, at 2,658.52 and the Nasdaq Composite was down 29.39 points, or 0.41 percent, at 7,110.86.

Stocks got a boost on Thursday after U.S. President Donald Trump cast doubt over the timing of his threatened strike on Syria, easing the risk of clashes between Western powers and Russia in Syria over an alleged chemical attack.

Talks of the United States re-opening negotiations with the Trans Pacific Partnership (TPP), a multinational trade deal the Trump administration walked away from last year, also helped sentiment.

But Trump later tweeted that the United States would only join the TPP if the deal were substantially better than the one offered to former President Barack Obama.

Tesla jumped 2 percent after its founder Elon Musk said the electric car maker will not need to raise any money this year as it will have positive cash flow and be profitable in the third and fourth quarter.

Dropbox fell about 7 percent after brokerage Instinet started with "reduce" rating on the cloud-based storage firm.