Stocks Slump, Led by Banks; Kraft Gains

Stocks turned weaker again in the wake of disappointing economic news, and ahead of major earnings releases.

The Dow Jones Industrial Average fell more than 40 points a day after a choppy session that ended with the blue-chip index slightly higher.

JPMorgan and Hewlett-Packard led the Dow lower, while Kraft gained.

The S&P 500 and the Nasdaq also fell. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 17.

Most key S&P sectors fell, led by financials and technology.

Trading remains largely directionless as investors as investors have little sense of what direction the market is going to move with the bulk of earnings releases yet to come. A little more insight into the tech industry could come with Google's release after-the-bell, said J.J. Kinahan, chief derivatives strategist at TD Ameritrade.

"Google is not a pure tech play so to speak, but it's the first major component of that industry," he said. "People are looking for something to point to."

Trading could also be affected by the monthly expiration of futures and options on Friday, he said.

"You’ll see some interesting trades today," Kinahan said, including "things that don't make sense."

Earlier, for instance, the VIX fell along with S&P futures. Usually, the VIX moves in the opposite direction of stocks.

Financials were among the weakest sectors on Thursday, a day after JPMorgan released strong earnings that nonetheless disappointed once investors looked more closely at the results. Bank of America reports earnings before the market opens on Friday.

Meanwhile, Goldman Sachs fell after a U.S. Senate report on Wall Street's role in the financial crisis published Wednesday accused of misleading clients and manipulating markets in mortgage-bond deals leading up to the financial crisis. Deutsche Bank , which was also cited in the report, fell too.

The Securities and Exchange Commission has also launched an investigation into whether a number of banks including Bank of AmericaUBS and Citigroup colluded to manipulate Libor rates according to a report in the Wall Street Journal.

Meanwhile, JPMorgan

Microsoft skidded after Morgan Stanley noted declining demand for personal computers could hurt the computer firm. Roth Capital, meanwhile, downgraded Intel to "neutral" citing a slowdown in PC sales as well as the company's lack of progress with smartphones and tablets.

First Solar sank after investor Jim Chanos said on CNBC that the maker of thin film solar panels was "problematic" and was experiencing a large amount of insider selling.

Toys R Us is also in focus following a Reuters report the toy retailer is targeting an initial public offering in July.

Oil prices were mixed, with prices moving in relation to a weaker dollar , which was also weakened by strength in the yen.

London Brent crude slipped below $123 a barrel, while U.S. light crude climbed to nearly $108.

Meanwhile, Gold climbed as the dollar fell, rising above $1,460 an ounce.

The session got off to a weak start after the government reported jobless claims rose by 27,000 to 412,000in the week ended April 9. Continuing claims for week ended April 2 dropped to 3.68 million from 3.74 million the week before, the lowest level since September 2008, the Labor Department said.

The Producer Price Index, meanwhile, rose 0.7 percent in March from a 1.6 percent gain in February, the Labor Department said. Core PPI rose 0.3 percent in March after a 0.2 percent gain in February. Economists surveyed by Reuters expected a 0.2 percent rise.

Futures were lower before the economic releases amid renewed investor concerns about the debt crisis in peripheral European countries. There are also concerned that high inflation in China will lead to further rate hikes.

Investors also waited to see how markets would react to President Obama’s plan to reduce the U.S. budget deficit.

The President outlined his vision for reducing the deficit Wednesday by a total of $4 trillion over the next 12 years by finding savings in the defense budget, healthcare spending, domestic expenditure, and reform of the federal tax system.

Investors will focus on comments from Fed Governor Elizabeth Duke, Minneapolis Fed President Naryana Kocherlakota, Philadelphia Fed President Charles Plosser, Fed Governor Daniel Tarullo, and Richmond Fed President Jeffrey Lacker.

Elsewhere, commodities giant Glencore announced plans to raise up to $12.1 billion in a London and Hong Kong offering that was predicted to boost dealmaking capacity at the height of a resources boom.

The announcement failed to lift European markets, all of which were trading lower in the mid-morning session.

On Tap This Week:

THURSDAY: 30-year Treasury bond auction, Kocherlakota speaks, Plosser speaks, Lacker speaks, Nestle shareholder meeting; earnings from Google after-the-bell.
FRIDAY: CPI, Empire state manufacturing survey, Treasury international capital, industrial production, consumer sentiment, credit card default rates reported; Evans speaks, Hoenig speaks, G24/International Monetary Affairs meeting; Earnings from Bank of America and Mattel before-the-bell.

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