Stocks trimmed some of its earlier losses but remained lower Thursday, led by financials, following a pair of tepid manufacturing reports that overshadowed strong earnings results from JPMorgan.
"My gut instinct is to sell the rally," Dave Rovelli, a trader at Canaccord Adams, said on CNBC this morning, citing economic concerns. "The consumer is already dying," he said, but is incurring higher costs and taxes now.
Financials were the biggest drag this morning as JPMorganbeat earnings expectations but failed to impress analysts.
Rochdale banking analyst Dick Bove said this wasn't a good reportand that he would've liked to see better revenue from the bank. This came after the bank's CEO Jamie Dimon delivered a cautious forecast, saying, "It is too early to say how much improvement we will see from here."
But S&P Equity raised JPMorgan's price target to $50.
Bank of America and Citigroup also declined ahead of results from both banks at the end of the week. Both banks are expected to post decent results, helped by asset sales, but neither are expected to see an increase in their profits.
Meanwhile on Capitol Hill, the financial-reform bill is nearing the finish line, with Senate leaders setting a series of final votes on the measure for around 2 p.m. New York time.
Tech stocks dropped more than 1 percent, despite getting a boost yesterday from Intel's earnings results.
Apple shares fell more than 1 percent after the company announced late Wednesday that it will hold a news conference on Friday to talk about the iPhone 4, the subject of many reports about reception problems. Apple wouldn't give further details ahead of the conference, but the buzz on the Internet is that it may recall the phone.
Meanwhile, shares of Apple's rivals Nokia , Research In Motion and Motorola climbed.
Investors shrugged off another encouraging data point for the tech sector: World-wide PC shipments jumped over 22 percentin the second quarter as businesses are increasingly replacing their aging technology, research firm IDC reported.
"Commercial replacements continue to grow," IDC analyst Bob O'Donnell said. However, O'Donnell said consumer activity has started to slow.
Dell shares rose after the computer maker moved up the ladder of top computer makers to No. 2, behind Hewlett-Packard . Taiwanese PC maker Acer is No. 3.
Earnings are due out after the bell today from tech giant Google and Intel rival Advanced Micro Devices .
Google's is expected to report earnings of $6.50 or more, according to the latest estimates, up more than a dollar from the $5.36 a share it earned a year earlier. One analyst said he thinks Google could fall short of Wall Street's expectationsbut still thinks the stock is a "buy."
Amazon shares dropped more than 2 percent after Bank of America-Merrill Lynch downgraded the stock to "neutral" from "buy," citing slowing growth.
A one-two punch from the manufacturing sector overshadowed any positive signs on the economy:
First, the NY Fed reported its gauge of manufacturing in the region fell in July, the lowest since December 2009. Then, the Philadelphia Fed said its gauge of regional manufacturing activity also dropped in July, the lowest reading since last summer.
Among the morning's other economic data: Jobless claims fell by 29,000 last week to 429,000, the Labor Department reported. And in June, producer prices fell 0.5 percent, while industrial production ticked up 0.1 percent.
Shares of credit card issuers Capital One and Discover Financial Services fell despite latest reports that credit card charge-offs and delinquencies improved in Juneas fewer Americans fell behind on credit card payments.
The health care sector was one one of the best performing sectors led by US-traded shares of GlaxoSmithKline, which rose after advisers to the FDA said the company's diabetes drug Avandia be allowed on the market in some form.
Shares of insurers such as Aetna and WellPoint were also higher despite a price cut from Deutsche Bank.
Johnson & Johnson is expected to outline new quality control strategies for regulators today, after repeated recalls of Tylenol and other consumer medicines over the past year.
Meanwhile, BP shares rose as the oil giant has begun the test of its new well cap, hoping that it will ultimately wind up stopping the flow of oil in the Gulf for the first time since the explosion that ruptured the well in April.
Oil prices reversed earlier gains to fall near $76 a barrel. Gold prices rose above $1,207 an ounceand the dollar fell broadly against the euro.
Radio Shack continued to rise on news that the retailer is currently conducting a "soft auction," with an eye towards a possible sale. Radio Shack's stock has been soaring in recent days on speculation that a deal was near for the firm to be acquired by a private-equity firm.
Shares of KKR , the parent company of private-equity firm Kohlberg Kravis Roberts, rose on their debut, three years after they initially filed to go public.
On the flip side, shares of vitamin maker NBTY soared more than 40 percent to a new three-year high following news that the Carlyle Groupplans to take the company private.
China's third largest bank, Agricultural Bank, had a weak debut in Shanghaitoday as some pros said the stock was overvalued. Still, one analyst said the reason the stock wasn't in negative territory was became it was a "political task' to keep it above the IPO price. The stock will debut in Hong Kong tomorrow.
Still to Come:
THURSDAY: Fed's Lacker speaks; Earnings from Google and AMD after the bell
FRIDAY: CPI; consumer sentiment; Earnings from Bank of America, Citigroup, GE and Gannett
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