U.S. stocks extended losses on Friday, with big Wall Street banks tumbling after their earnings reports, while weaker-than-expected retail sales data raised concerns about an economic recovery dented by soaring coronavirus cases.
Wall Street’s main indexes fell as incoming President Joe Biden’s $1.9 trillion stimulus plan sparked fears of an increase in taxes, while investors parsed quarterly reports from major U.S. lenders.
Shares of JPMorgan Chase & Co, Citigroup Inc and Wells Fargo & Co, which had seen a strong rally in the run-up to earnings, were all down even as the banks posted better-than-expected fourth-quarter profits.
JPMorgan fell 0.6% following a seven-day winning streak that had pushed the stock about 12% higher.
The S&P 500 banks index shed 1.9%.
Wall Street’s main indexes are set to wrap up the week slightly lower after climbing to record highs recently, driven by growth-sensitive cyclical stocks on bets of a hefty fiscal package and optimism about vaccine distribution.
Six of the 11 major S&P sectors fell with energy, financials, industrials posting the steepest declines.
Biden’s stimulus package proposal, unveiled on Thursday, includes $415 billion to accelerate the distribution of vaccines, some $1 trillion in direct relief to households, and roughly $440 billion for small businesses and communities particularly hard hit by the pandemic.
Some investors worried that the government will need to fund the spending through tax hikes.
Meanwhile, data showed a further decline in U.S. retail sales in December - the latest sign the economy lost considerable speed at the end of 2020.
Earnings for S&P 500 companies are expected to decline 9.5% in the final quarter of 2020 from a year ago, but are expected to rebound in 2021, with a gain of 16.4% projected for the first quarter, according to IBES data from Refinitiv.