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.