By Caroline Valetkevitch
NEW YORK (Reuters) - The Dow and S&P 500 slipped on Thursday, with the S&P retreating from the previous session's record high, after earnings from Goldman Sachs (NYS:GS - News) and other banks disappointed investors.
Financials were the biggest drag on the market after both Goldman Sachs Group Inc (NYS:GS - News) and Citigroup Inc (NYS:C) reported that lower bond trading revenue took a bite out of their quarterly profits. Goldman's earnings fell 21 percent. Citigroup's profit missed expectations.
The results followed fairly positive reads on the financial sector from JPMorgan Chase & Co (JPM.N), Bank of America Corp (BAC.N) and Wells Fargo & Co (WFC.N) earlier this week.
Goldman's stock slid 2 percent to close at $175.17. It was the biggest drag on the Dow. Citigroup's stock dropped 4.4 percent to end at $52.60 and was the biggest negative for the S&P 500. The S&P financial sector index fell 0.6 percent, making it the biggest loser among the 10 sectors in the S&P 500.
Analysts said that given the S&P 500's gain of 30 percent last year, the market doesn't need much of a catalyst for selling.
"You get a day like today with a little disappointment following a day when the market was up big, and we get a selloff like this," said Bucky Hellwig, senior vice president of BB&T Wealth Management in Birmingham, Alabama.
Concerns that stock valuations may be too high put some pressure on stocks after last year's rally. But the S&P 500 index surged 1.6 percent over the previous two sessions on results and economic data to close at a record high on Wednesday, its first since December 31.
The Dow Jones industrial average fell 64.93 points or 0.39 percent, to end at 16,417.01. The S&P 500 slipped 2.49 points or 0.13 percent, to finish at 1,845.89. The Nasdaq Composite added 3.805 points or 0.09 percent, to close at 4,218.688.
Though the earnings season has just started, companies are beating expectations at a rate that's below the long-term average. Based on earnings from 6 percent of S&P 500 companies, 48 percent are beating expectations, below the historical average of 63 percent for a full season, Thomson Reuters data showed.
During the regular session, UnitedHealth Group Inc (NYS:UNH - News) fell 2.8 percent to close at $72.76 after the largest U.S. health insurer said that implementing the national healthcare reform law, often called Obamacare, and funding cuts for private Medicare coverage would result in some expenses that would eat into 2014 profit. UnitedHealth, however, reported a higher fourth-quarter profit on Thursday and said 2014 earnings would improve.
The stock of Best Buy Co Inc (NYS:BBY - News) plunged 28.6 percent to close at $26.83, making it easily the S&P 500's biggest percentage decliner, followed by CSX. Best Buy, the world's largest consumer electronics chain, reported a drop in holiday sales and forecast a bigger-than-expected decline in quarterly operating margins.
The day's economic data included initial claims for state unemployment benefits, which slipped 2,000 to a seasonally adjusted 326,000 in the week ended January 11. Claims for the prior week were revised to show 2,000 fewer applications received than previously reported, suggesting a sharp slowdown in job growth in December was likely to be temporary.
The Consumer Price Index rose 0.3 percent in December while the core CPI, which strips out volatile food and energy prices, edged up only 0.1 percent, suggesting underlying inflation was muted. The Philadelphia Federal Reserve Bank said its business activity index stood at 9.4 points in January, compared with 6.4 in December.
In the deal arena, Apollo Global Management LLC (NYS:APO - News) said it would buy CEC Entertainment Inc (NYS:CEC - News), the parent of the Chuck E Cheese restaurant chain, for about $948 million. CEC Entertainment's stock shot up 13.1 percent to $54.75. Apollo Global's shares rose 0.8 percent to end at $36.05.
(Editing by Nick Zieminski and Jan Paschal)
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