NEW YORK: Wall Street's main indexes finished lower on Friday, with the biggest drag coming from big U.S. banks after their earnings reports, while the energy sector was weighed down by a regulatory probe into Exxon Mobil Corp.
The S&P 500 banks index lost ground as shares of Wells Fargo & Co, JPMorgan Chase & Co and Citigroup Inc tumbled even though they had posted better-than-expected fourth-quarter profits. The bank sector had rallied sharply in recent days.
Wells Fargo was the among biggest drags on the S&P 500, along with Exxon Mobil.
"Financials and energy have been disappointing ... that's bringing down the whole market," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
"This year is the year for financials, energy, materials, industrials. So if there is a day when they're not leading, it's not good news for the market."
Wall Street's major indexes had recently hit record highs on hopes for a hefty fiscal stimulus package.
Incoming U.S. President Joe Biden late on Thursday unveiled a US$1.9 trillion stimulus proposal, which included some US$1 trillion in direct relief to households.
Meanwhile, data showed a further decline in U.S. retail sales in December in the latest sign the economy lost considerable speed at the end of 2020.
"The weaker-than-expected economic data, and especially in parts of the economy like retail sales, is a big driver," said Liz Ann Sonders, chief investment strategist at Charles Schwab.
"We are seeing sentiment through last week in extreme speculative frothy euphoric optimistic territory," she said.
"Sometimes it doesn't need a catalyst before it begins to fall on its own weight."
Unofficially, the Dow Jones Industrial Average fell 159.66 points, or 0.52per cent, to 30,831.86, the S&P 500 lost 25.55 points, or 0.67per cent, to 3,769.99 and the Nasdaq Composite dropped 107.76 points, or 0.82per cent, to 13,004.88.
Earnings for S&P 500 companies are expected to decline 9.5per cent in the final quarter of 2020 from a year ago, but are expected to rebound in 2021, with a gain of 16.4per cent projected for the first quarter, according to IBES data from Refinitiv.
Exxon shares fell after a report said that the U.S. Securities and Exchange Commission launched an investigation of the oil major, following a whistleblower's complaint that it overvalued a key asset in the prolific Permian shale oil basin.
(This story corrects third paragraph to reflect WFC, XOM among biggest drags on S&P.)
(Additional Reporting by Devik Jain and Medha Singh in Bengaluru and Sinéad Carew, Editing by Marguerita Choy)