The S&P 500 bank index dropped 2.1% to hit a five-week low, with shares of Wells Fargo down 5.1% after the company missed fourth-quarter profit expectations.
Citigroup were down 4.1% and Bank of America fell 4.2% even after the companies beat Wall Street estimates for fourth-quarter profit.
Financials including the banks, which were up sharply in 2025, have fallen this week amid concerns over US President Donald Trump’s proposed cap on credit-card interest rates which JPMorgan executives warned could squeeze consumers and hurt financial sector profits.
“After a nice run, and so-so or mediocre earnings, you’re seeing profit-taking and consolidation,” in the banks, said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut. “Generally speaking, people are still optimistic on the group.”
In tech, he said, investors are looking to rotate out of expensive megacaps and into value and more defensive names. In addition, the president has gone after a number of industries, “putting Main Street over Wall Street.”
The S&P 500 technology sector led declines among sectors, however, while more defensive groups including consumer staples rose.
The Dow Jones Industrial Average fell 142.31 points, or 0.29%, to 49,049.87, the S&P 500 lost 54.24 points, or 0.78%, to 6,909.48 and the Nasdaq Composite lost 320.57 points, or 1.35%, to 23,389.89.
Shares of Broadcom, Palo Alto Networks and Fortinet fell after a Reuters report said Chinese authorities have told domestic companies to stop using cybersecurity software made by roughly a dozen US and Israeli firms.
Data earlier on Wednesday showed producer prices in the US matched forecasts in November, but retail sales topped expectations, following data a day earlier showing December consumer prices rose as projected.
Interest rates are widely expected to hold steady through the first half of the year, including at the Fed’s January meeting, with traders pricing in at least two cuts before year-end, according to LSEG data.
Advancing issues outnumbered decliners by a 1.52-to-1 ratio on the NYSE. There were 430 new highs and 55 new lows on the NYSE. On the Nasdaq, 2,509 stocks rose and 2,173 fell as advancing issues outnumbered decliners by a 1.15-to-1 ratio.