NEW YORK ( TheStreet) -- Stocks slumped Wednesday with the S&P 500 and Nasdaq Composite suffering their worst drops in more than two months as financial and tech stocks came under selling pressure. The Dow Jones Industrial Average shed 13 points or 0.1% to finish at 11,825. The S&P 500 fell 13 points, or 1%, to 1282, while the Nasdaq sank 40 points, or 1.5%, to close at 2,725. Bank of America ( BAC) and American Express ( AXP) were among the Dow's biggest laggards. Weaker than expected results from Citigroup ( C) on Tuesday, and Goldman Sachs ( GS) before Wednesday's opening bell weighed on Bank of America ahead of its quarterly report on Friday morning, while AmEx earlier in the day announced plans to eliminate 550 jobs as part of a restructuring and forecast adjusted earnings of 94 cents a share for the fourth quarter, a penny below Wall Street's consensus view. Shares of IBM ( IBM), which
beat estimates with fourth-quarter earnings of $4.18 a share on revenue of $29 billion late Tuesday, posted the best percentage gain within the Dow, and Big Blue was among the few winners in the tech space. Breadth within the blue-chip index was decidedly negative with losers outpacing winners, 23 to 7. Goldman shares fell almost 5% to $166.49 after the bank surpassed analysts' fourth-quarter earnings estimates by 3 cents with a profit of $3.79 a share but missed revenue expectations. Revenue for the December quarter totaled $8.64 billion, roughly 4% below the nearly $9 billion that Wall Street had been projecting. Wells Fargo ( WFC) met profit estimates with earnings of 61 cents a share and reported better than expected revenue of $21.5 billion, compared with the $20.98 billion that analysts had forecast but shares were off by 2.1% at $31.80. Other financials reporting quarterly results on Wednesday included State Street ( STT) and U.S. Bancorp ( USB). State Street shares shed 4.1% at $48 as an 84% plunge in its fourth-quarter profit resulting from a "repositioning" of its portfolio overshadowed the fact that it topped earnings estimates by a penny. U.S. Bancorp also reported better-than-expected earnings, but shares closed down 2.9% to $26.52. Shares of Northern Trust ( NTRS) were also weak after its results fell short of expectations. Profits fell 22% to $157.1 million or 64 cents per share. The Financial Select Sector ETF ( XLF) was off by 2.2% at $16.25 and shares of Morgan Stanley ( MS), which reports its fourth-quarter results before Thursday's opening bell, were down 3.5% at $27.75. "By and large, the earnings coming in are better than expected, and the quality of earnings is certainly in focus, however the market is now being challenged by two disappointing earnings reports," said Peter Cardillo, chief market economists at Avalon Partners, adding that the market is also seeing some short-term resistance as the Dow approaches 12,000 and the S&P 500 nears 1300. "The market here has had a nice run but we're seeing some technical resistance as it approaches these key psychological levels." Volume came in at 1.08 billion on the New York Stock Exchange and 2.14 billion on the Nasdaq. Breadth was very negative for the broad market with advancers outnumbering decliners by a roughly 4-to-1 margin on both exchanges.
Earlier, the Commerce Department said housing starts slipped 4.3% in December to 529,000 from 553,000, previously, missing expectations for 550,000 starts. Meanwhile, building permits jumped 16.7% to 635,000, from 544,000 in November, surpassing the 560,000 permits that economists had expected for December.
"Disappointing housing starts today were just confirmation of what the market already knows, that the housing market remains in a very depressed state," said Cardillo. The market was also watching out for headlines coming out of the White House as Chinese President Hu Jintao meets with President Barack Obama during a four-day stay in the U.S. General Electric ( GE) has lined up five deals with China that will generate an estimated $2 billion in revenue, the company said on Wednesday. Mosaic ( MOS) shares dived 10.5% to $76.15 on news that Cargill would
divest its 64% stake in the fertilizer company . Shares of U.S. Steel ( X) were down 5.9% at $52.33 on a downgrade to hold from buy at Deutsche Bank. AK Steel ( AKS) got caught in the downdraft with its stock down more than 4%. Shares of Dell ( DELL), Cisco Systems ( CSCO) and Amazon ( AMZN) dragged the Nasdaq lower.
Shares of eBay ( EBAY) were surging over 3% in aftermarket trading after
it reported profits of 52 cents a share on revenue of $2.5 billion. Analysts were calling for a profit of 47 cents a share on revenue of $2.48 billion. Seagate Tech ( STX), the world's largest hard-drive disk maker said after the bell that net profit fell to $150 million or 31 cents per share from $533 million or $1.03 a share one year earlier. Excluding restructuring expenses, it reported earnings of 33 cents per share, matching estimates. Shares were down nearly 4% in aftermarket trading. In commodity markets, the March crude oil contract shed 50 cents to settle at $90.86 a barrel. The February gold contract was up by $2 to settle at $1,370.20 an ounce. The dollar weakened against a basket of currencies with the dollar index down by 0.4%. The benchmark 10-year Treasury note rose 7/32, diluting the yield to 3.343%. . Hong Kong's Hang Seng added 1.1% and Japan's Nikkei rose 0.4%. London's FTSE lost 1.3% and the DAX in Frankfurt shed 0.9%. --Written by Melinda Peer and Shanthi Bharatwaj in New York.