The close: Wall Street dips as bank stocks, Syria nerves weigh

Financial stocks led a drop on Wall Street on Friday as results from big banks failed to provide enthusiasm and fear of broader conflict in Syria further unnerved investors.

The Dow Jones Industrial Average fell 122.81 points, or 0.5 per cent, to 24,360.24, the S&P 500 lost 7.69 points, or 0.29 per cent, to 2,656.3 and the Nasdaq Composite dropped 33.60 points, or 0.47 per cent, to 7,106.65.

Shares of JPMorgan Chase & Co, the biggest U.S. bank by assets, dropped 2.7 per cent in a reversal from premarket trading after the bank’s quarterly profit fell slightly short of expectations. JPMorgan was the biggest percentage decliner on the Dow.

Wells Fargo sank 3.1 per cent after the bank said it may have to pay a penalty of $1 billion to resolve investigations, while Citigroup dropped 1.7 per cent despite beating profit estimates.

“Even with great earnings, maybe the expectations were so high that they are not propelling the market further,” said Jim Awad, senior managing director at Hartland & Co in New York. “Good earnings are already priced into the market.”

Canada’s main stock index was little changed on Friday as gains for the shares of mining and energy companies were offset by declines in financial stocks.

The Toronto Stock Exchange’s S&P/TSX composite index unofficially closed up 4.7 points, or 0.03 per cent, at 15,273.97. Four of the index’s 10 main groups ended higher.

The materials group added 0.8 per cent. Barrick Gold Corp. was up 2.6 per cent, while Teck Resources Inc. finished up 2.1 per cent.

The heavyweight energy group also rose 1.1 per cent, led by a 2-per-cent rise in shares of Canadian Natural Resources Ltd. and 3.6-per cent jump in Encana Corp.

Financial stocks fell 0.5 per cent, led 0.7-per-cent drops by Royal Bank of Canada.

The pan-European FTSEurofirst 300 index rose 0.10 per cent and MSCI’s gauge of stocks across the globe shed 0.31 per cent.

In emerging markets, stocks lost 0.70 per cent.

Overnight, MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.24 per cent lower, while Japan’s Nikkei rose 0.55 per cent.

Global investors seemed to focus on the lack of a clear sign that any U.S.-led attack on Syria was imminent, but the prospect of Western military action in Syria that could lead to confrontation with Russia hung over the Middle East.

Oil prices rose on support from lingering concerns about geopolitical risk and reports of dwindling global oil stocks.

“The geopolitical jitters just keep getting priced in here more and more, as we get closer to the moment of the strikes, if there are any,” said John Kilduff, partner at hedge fund Again Capital Management. He noted that Syria poses a large risk to global stability because of its relationship with powerful oil producers.

“Syria is a client state of both Russia and Iran and the risk for escalation is quite high and I think that is what the market is worried about.”

U.S. crude rose 32 cents to settle at $67.39 a barrel, while Brent crude rose 56 cents to $72.58.

Trade tensions also were not far from the surface, with analysts at Citi noting prolonged uncertainty will likely hurt open Asian economies such as Taiwan, Singapore and South Korea.

The Hong Kong Monetary Authority stepped into the currency market and bought another HK$3.038 billion ($387.01 million) in Hong Kong dollars on Friday as the local currency hit the weaker end of its trading range.

The U.S. dollar hit a seven-week high against the Japanese yen. The yen tends to benefit from geopolitical uncertainty and risk aversion.

The dollar index rose 0.01 per cent, with the euro up 0.1 per cent to $1.2337.

The Japanese yen strengthened 0.03 per cent versus the greenback at 107.31 per dollar, while Sterling was last trading at $1.4238, up 0.09 per cent on the day.

Aluminum hit a six-year high on Friday and posted its biggest weekly gain since the current contract was launched after the United States imposed sanctions on Russia’s UC Rusal , the world’s second-biggest producer.

London Metal Exchange aluminum hit its highest since March 2012 at $2,340 a ton before retreating to close at $2,285, down 1.7 per cent.

Spot gold added 0.8 per cent to $1,345.90 an ounce. U.S. gold futures gained 0.54 per cent to $1,349.10 an ounce.

Copper rose 0.13 per cent to $6,829.85 a ton.