Bank stocks lead Wall Street lower amid Syria tensions, Russia trade threat

By April Joyner

NEW YORK (Reuters) - Financial stocks led a drop on Wall Street on Friday, as results from big banks failed to enthuse and geopolitical tensions in Syria and Russia further unnerved investors.

Shares of JPMorgan Chase & Co , the biggest U.S. bank by assets, dropped 3.7 percent in a reversal from premarket trading after the bank's quarterly profit fell slightly short of expectations. JPMorgan was the biggest percentage decliner on the Dow.

Wells Fargo sank 3.3 percent after the bank said it may have to pay a penalty of $1 billion to resolve investigations, while Citigroup dropped 3.0 percent despite beating profit estimates.

 

The S&P banks index <.SPXBK> fell 3.2 percent and the broader S&P financial index <.SPSY> lost 2.0 percent, the most among the 11 major S&P sectors.

"Even with great earnings, maybe the expectations were so high that they are not propelling the market further," said Jim Awad, senior managing director at Hartland & Co in New York. "Good earnings are already priced into the market."

The Dow Jones Industrial Average <.DJI> fell 219.43 points, or 0.9 percent, to 24,263.62, the S&P 500 <.SPX> lost 16.6 points, or 0.62 percent, to 2,647.39 and the Nasdaq Composite <.IXIC> dropped 57.34 points, or 0.8 percent, to 7,082.91.

Friday's bank results kicked off earnings season, with Thomson Reuters data predicting profits at S&P 500 companies increased by 18.6 percent from a year ago, their biggest rise in seven years.

While the U.S. economy is performing well, geopolitical issues are weighing on stock markets this year, after almost a decade of uninterrupted gains.

The State Department said that it was confident that Syria carried out a missile attack in the town of Douma last weekend and that Russia's claim of a faked attack was false.

Senior Russian lawmakers said on Friday that the lower house of parliament would consider draft legislation giving the Kremlin powers to ban or restrict a list of U.S. imports, reacting to new U.S. sanctions on Russian tycoons and officials.

"I have been up to this point, pretty adamant that a trade war is going to be much less of a war and more of a skirmish," said Crit Thomas, global market strategist at Touchstone Investments. "I'm starting to come around to maybe this is almost inevitable."

Boeing fell 3.0 percent after a Russian lawmaker said the country may stop supplying titanium to the company.

Issues with engines for Boeing's 787 Dreamliner planes also weighed on the company's shares.

The top gainer among S&P sectors was energy <.SPNY>, up 0.9 percent as oil prices rose. [O/R]

Tesla rose 2.54 percent after founder Elon Musk said the electric car maker would be profitable in the third and fourth quarters and would not need to raise any money this year.

(Additional reporting by Sruthi Shankar in Bengaluru; Editing by Patrick Graham and Chizu Nomiyama)