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Markets Close Lower After Dismal Week of Selloffs

NEW YORK (TheStreet) -- Heavy from a week in the red, high-momentum stocks continued to lead U.S. markets lower into the week's close Friday. Bank stocks sank after a lackluster earnings report from JPMorgan Chase (JPM), while heavy-volume technology and biotechnology stocks continued to slide.

  • The Dow Jones Industrial Average closed 0.88% lower to 16,027.84 while the S&P 500 shed 0.95% to 1,815.71. The Nasdaq was off 1.34% to 3,999.73 and down 3.1% since Monday.
  • JPMorgan shares fell 3.7% after the largest U.S. bank reported first-quarter profit of $5.27 billion, or $1.28 a share, a drop from $6.53 billion, or $1.59 a share, a year earlier. Analysts were expecting earnings per share of $1.40.
  • Wells Fargo (WFC) was 0.78% higher after reporting first-quarter earnings of $1.05 a share compared to average earnings estimates of 97 cents a share. Revenue matched expectations at $20.6 billion.
  • Social media and tech stocks fell: Facebook (FB - Get Report) was down 1.1% while Twitter (TWTR - Get Report) was off 3.1%.
  • In retail, Family Dollar Stores (FDO) fell 1.9% after it said it would cut jobs and close about 370 underperforming stores as it tries to reverse sagging sales and earnings. The discount store operator will also permanently lower prices on about 1,000 basic items. Gap (GPS) slipped 2.3% after being downgraded at Janney Montgomery to "neutral" from "buy."
  • For the first quarter, analysts are expecting earnings for the S&P 500 to decrease 0.13% year-over-year, with EPS of $26.66, according to S&P Capital IQ. The sectors expected to be the biggest laggards this quarter are energy (-7.7%) and financials (-3.9%). Analysts anticipate that four sectors will post earnings growth in the first quarter, with telecom (40.8%) and consumer discretionary (8.0%) leading growth.
  • Birinyi Associates noted that while forecasts for index profits have been dropping, there are some individual names that analysts have been turning more bullish on. Birinyi has identified nine companies that analysts have been both upgrading and increasing their first-quarter EPS estimates on heading into earnings season: Alaska Air (ALK), Amgen (AMGN), Bristol-Myers Squibb (BMY), Chipotle Mexican Grill (CMG), Google (GOOG), Restoration Hardware (RH)Raytheon (RTN), Southern Co. (SO) and U.S. Steel (X).
  • A day earlier, U.S. stocks suffered as a two-day recovery was stopped short by heavy selling of high-momentum names in the technology and biotech sectors. The losses came even as data showed improvement in labor market conditions. The S&P 500 Index is now eyeing its steepest weekly retreat in a month.
  • International markets were in the red. The Hang Seng closed 0.79% lower while the Nikkei slumped 2.38%. Japanese Prime Minister Shinzo Abe will reportedly meet Bank of Japan Governor Haruhiko Kuroda this month to discuss monetary policy amid fears over the impact of a sales tax that was raised this month. Germany's DAX finished 1.47% lower while the FTSE shed 1.21%.
  • "There is a great divide in the global economy," said Matt Sherwood, Perpetual's head of investment markets research, told clients. "Central banks in Europe, Japan and China are all examining ways of improving the economic outlook through more stimulus, whereas counterparts in the US and Australia are considering when to reduce monetary policy easing."
  • The Thomson Reuters/University of Michigan preliminary index of sentiment rose to 82.6 in April from 80 a month earlier and beat expectations for a result of 81. The March producer price index for March also notched a higher-than-expected result, rising 0.5%.

-- By Jane Searle, Andrea Tse and Keris Alison Lahiff in New York

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