US stocks retreat from records; banks, media shares weak

US stocks retreat from records; banks, media shares weak

NYSE 286
Traders work on the floor of the New York Stock Exchange. (Photo: AP/Richard Drew)

NEW YORK: Wall Street stocks retreated from records on Thursday (Oct 12) as investors soured on financial shares following earnings from large banks, a sector that has risen significantly this year.

Both JPMorgan Chase and Citigroup reported better-than-expected profits, but the financial sector was one of the worst performing groups.

"There has been much optimism baked into the market" on bank earnings, said Lindsey Bell, investment strategist at CFRA Research, who suggested in a note that shareholders hold or trim bank stocks.

The Dow Jones Industrial Average fell 31.88 points (0.14 per cent) to 22,841.01.

The broad-based S&P 500 dropped 4.31 points (0.17 per cent) to 2,550.93, while the tech-rich Nasdaq Composite Index shed 12.04 points (0.18 per cent) to 6,591.51.

All three indices ended at records on Wednesday.

Citigroup fell 3.4 per cent despite reporting a seven per cent rise in profits to US$4.1 billion. Analysts expressed concerns about higher reserves set aside for bad loans and about a weak trading performance.

JPMorgan dropped 0.9 per cent after reporting a seven per cent rise in profits to US$6.7 billion.

AT&T sank 6.1 per cent as it confirmed many of its full-year financial targets, but said it expects a hit of US$210 million in pre-tax earnings in the third quarter due to US hurricanes and earthquakes in Mexico.

AT&T also said it expects a drop of 90,000 in total US video subscribers as more consumers shun traditional cable packages in favor of streaming and other "over-the-top" services.

Charter Communications fell 2.6 per cent and Viacom lost 3.4 per cent following reports that the two sides are clashing over contract terms for broadcasts of MTV and other Viacom networks as Charter seeks more streaming broadcasts.

Other media shares were weak, including Disney and Comcast, both of which lost more than one per cent.

Source: AFP/ec