Stocks Slide as Bank Rally Loses Steam
Stocks turned lower Thursday as bank stocks backed off their early rally and techs dragged on the Nasdaq.
"The techs are under a little bit of pressure," Peter Kenny, managing director at Knight Equity Markets, told Reuters. "There is a lot of rotation going on and what's really driving the market," he said.
Bank of America, Wells Fargo and Citigroup turned mixed, after gaining more than 15 percent in the previous session.
Bernanke said increasing the effectiveness of bank supervisionis a "top priority" for the Fed. Treasury Secretary Tim Geithner sought to ease fears about the results by saying that none of the banks being tested face the risk of insolvency.
CNBC-parent General Electric gained after CEO Jeff Immelt said the conglomerate's struggling finance arm is doing better than expected. Barclays raised the price target on GE to $15 from $10 and raised its rating to "overweight."
General Motors shares rose sharply after the troubled automaker reported a net loss of $9.78 a share but beat analysts' target. GM burned through $10 billion of cash in the previous quarter.
In economic news, initial jobless claims fell more than expected, to their lowest level since January. Continuing claims, however, hit another record.
This came after a pair of reports Wednesday — from ADP and Challenger, Gray & Christmas — showed the pace of layoffs is beginning to slow.
The Labor Department's April jobs number is due out on Friday. Economists expect it to show that 600,000 jobs were shaved from nonfarm payrolls and that the unemployment rate jumped to 8.9 percent from March's 8.5 percent, according to Reuters.
Technology stocks were lower, pushing the Nasdaq into negative territory, as investors backed off the sector which has been leading the current rally.0
SiriusXM was the biggest percent decliner on the Nasdaq 100 after the satellite-radio company posted a quarterly loss but raised its outlook.
Chips and telecoms were also among the big drags on Nasdaq. Applied Materials , KLA Tencor and Xilinx were all down more than 4 percent.
AT&T and Verizon fell about 4 percent each after JPMorgan cut its rating on the stocks to "neutral" from "overweight."
April same-store sales came in better than expected, as warm weather and glimmers of hope for the economy put investors more in the mood to spend.
Wal-Mart reported its same-store sales rose 5 percent, surpassing the 2.9 percent expected, but cautioned that the second quarter will be challenging compared with a year ago, when government stimulus checks were handed out.
Gap sales dropped 4 percent but that was nearly half the 7.8 percent decline expected. And Children's Place hopped to a 5-percent gain when analysts had expected sales to be flat.
Shares of AIG shot up more than 10 percent ahead of earnings from the insurer, due out after the closing bell. AIG is expected to post a 5 cent per-share loss.
Still to Come:
THURSDAY: Stress-test results; Google shareholders meeting; Consumer credit; Earnings from AIG, CBS, Nvidia after the bell
FRIDAY: Jobs report; wholesale trade; Earnings from Toyota, Berkshire Hathaway
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