Wall Street in the red as banks slip ahead of earnings

By Yashaswini Swamynathan

REUTERS - U.S. stocks reversed course to trade lower on Monday as losses in financial stocks, ahead of quarterly earnings later this week, offset a boost from energy shares.

JPMorgan, Citigroup and Wells Fargo are scheduled to report earnings on Thursday and could throw some light on the U.S. banking industry's performance amid a rally in financial shares since the election of President Donald Trump.

However, bank stocks have retreated of late as investors question lofty valuations and Trump's ability to swiftly introduce simpler regulations and other policies following the failure of a healthcare reform bill.

The S&P 500 financial sector was off 0.56 percent, dragged down by Bank of America, JPMorgan and Wells Fargo.

"The financial sector has been a darling performer since the election and we've seen some of that performance retreat in the last couple of weeks," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

"So, what the banks report and what their guidance is will be the primary driver for equity prices over the next week or two."

Earnings of S&P 500 companies are estimated to have risen 10.1 percent in the first three months of the year. The index is currently trading at 17.4 times forward earnings estimates, above its long-term average of 15, according to Thomson Reuters I/B/E/S.

Geopolitical tensions added to investor unease. U.S. Secretary of State Rex Tillerson said on Sunday the military strikes against Syria over its alleged use of chemical weapons were a warning to other nations, including North Korea, that "a response is likely" if they pose a danger.

At 12:12 p.m. ET (1612 GMT), the Dow Jones Industrial Average was down 33.22 points, or 0.16 percent, at 20,622.88, the S&P 500 was down 2.98 points, or 0.13 percent, at 2,352.56. The Nasdaq Composite was down 7.95 points, or 0.14 percent, at 5,869.86.

Thursday will be the last trading day of the week on Wall Street ahead of the Good Friday holiday.

Four of the 11 major S&P sectors were higher, with energy leading with a 0.94 percent gain, supported by higher oil prices. [O/R]

Technology was off 0.13 percent, led by declines in Intel and Nvidia.

Shares of Amazon.com was the top stock on the S&P and the Nasdaq, rising 1.2 percent to $905.92. The world's largest online retailer was upgraded to "buy" at Needham, according to a trader.

Straight Path Communications surged nearly two-fold to $89.71 after AT&T offered a huge premium to buy the owner of wireless spectrum licenses.

Swift Transportation jumped 21.7 percent to $24.36 after agreeing to a merger with fellow trucking company Knight Transportation. Knight's shares were up 12 percent.

Advancing issues outnumbered decliners on the NYSE by 1,665 to 1,141. On the Nasdaq, 1,433 issues fell and 1,281 advanced.

The S&P 500 index showed seven 52-week highs and two lows, while the Nasdaq recorded 55 highs and 25 lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Sriraj Kalluvila)