NEW YORK ( TheStreet) -- Stocks closed lower Friday, as investors didn't like what JPMorgan Chase's ( JPM) rising credit costs may mean for the rest of the financial sector as it heads into earnings season. The Dow Jones Industrial Average lost 101 points, or 0.9% to 10,610. The S&P 500 was dow 12 points, or 1.1%, to 1136, and the Nasdaq shed 29 points, or 1.2%, to 2288. Each of the major averages also lost ground for the week. The Dow fell about 0.1%, while the S&P 500 declined by 0.8%. The Nasdaq tumbled 1.3% since last Friday. > > Bull or Bear? Vote in Our Poll "I'm seeing a lot of market tiredness today," said Andrew Neale, portfolio manager for wealth management and advisory firm Fogel Neale Partners. "We've had a tremendous run over the past few weeks; there have been a lot of new highs made; and now we're seeing a bit of a correction. "Next week, we expect the market to sell off a little more," Neale said, adding that the market could correct several percentage points more. "We were a little cautious heading into this week, and it looks like that's played out." Although JPMorgan's fourth-quarter earnings rose to $3.3 billion, or 74 cents a share, beating analysts' expectations for a profit of 61 cents a share, revenue of $25.2 billion missed estimates for $27.02 billion. The company added $1.9 billion to reserves for consumer loan losses and said it wrote off loans at a 9.3% annualized rate during the fourth quarter.
CEO Jamie Dimon's comments that "results showed improvement" but "fell short of both an adequate return on capital and the firm's earnings potential" didn't bolster investors' confidence in the financial sector, which was the day's biggest laggard. Bank of America ( BAC) was the Dow's worst-performing stock with shares down 3.3%. Shares of Citigroup ( C) and Wells Fargo ( WFC) fell 2.6% and 3.1%, respectively. All three banks are scheduled to report results on Tuesday and Wednesday. The NYSE Financial Index was down 1.9%. Shares of Capital One Financial ( COF) fell 1.3% as the company said that although credit card delinquencies were lower in December, the number of loans that it doesn't expect to collect rose to 10.1%, from 9.6% in November. Commodities and related stocks also weakened as the dollar strengthened. It was last up 0.6% against a basket of foreign currencies, according to the dollar index.
Crude oil for February delivery traded $1.39 lower to settle at $78 a barrel after the International Energy Agency held steady its forecast for world oil demand in 2010. The February gold contract lost $12.50, or 1.1%, to settle at $1,130.50 an ounce. Intel ( INTC), considered a bellwether for tech industry spending, sped past analysts' estimates late Thursday, but the stock was among the Dow's weakest Friday, closing down 3.2% as the most heavily traded stock on the Nasdaq. "One of the fears is that markets seasonally peak in January because earnings are at their strongest coming off of the fourth quarter. Going into a three-day weekend with the market higher -- I think people are taking profits today," said Marc Pado, market strategist at Cantor Fitzgerald.
"Sometimes you get irrational moves on good news where there's a host of profit-taking, and I think today is a good example of that. Intel earnings were strong, JPMorgan came up a little shy on revenue, but consumer sentiment is solid, industrial production is up. Things are going quite well." Citigroup and Bank of America led NYSE volume, followed by Sprint Nextel ( S), whose stock rose 3.5%. Japanese cosmetics company Shiseido is picking up Bare Escentuals ( BARE) for $1.7 billion, paying a 43% premium to the U.S. company's Thursday closing price for all outstanding shares. Bare's stock went higher by 41.8%.
Consumer sentiment, as tracked by the University of Michigan survey, rose slightly in January as the preliminary reading came in at 72.8, up from 72.5 in December. Economists, however, had been looking for a stronger increase, to 74. Inflation cooled in December, according to the Labor Department, which said its consumer price index rose 0.1% in December, from a 0.4% increase in November. Economists had expected the index to show a 0.2% rise. Excluding food and energy prices, the core CPI rose 0.1% in December, which was in line with economists' estimates. As expected, industrial production grew 0.6% in December, according to the Federal Reserve. That compares with similar growth of 0.6% in November, which was downwardly revised from an originally reported increase of 0.8%. Manufacturing in New York state expanded in January as the Empire State measure of business conditions rose to 15.92 from an upwardly revised level of 4.5 in December.
Prices on U.S. Treasuries rose, decreasing yields. The yield on the two-year note was down to 0.874%, from 0.919% late Friday, and the 30-year bond fell to 4.576% from 4.612%. Yields on the benchmark 10-year note weakened to 3.680%, from 3.730% late Friday. -- Written by Melinda Peer and Sung Moss in New York.