* Dow down 0.5 pct, S&P 500 off 0.2 pct, Nasdaq off 0.02 pct
By Ryan Vlastelica
NEW YORK (Frankfurt: HX6.F - news) , Jan 16 (Reuters) - U.S. stocks fell on Thursday,with the S&P 500 pulling back from record levels following around of disappointing earnings as financial stocks led the waylower.
Financials were the biggest drag on the market after bothCitigroup Inc and Goldman Sachs Group Inc reportedquarterly profits hit by lower bond trading revenue, withGoldman's earnings falling 21 percent and Citigroup's missingexpectations. The results followed fairly positive reads on thesector from JPMorgan Chase & Co (NYSE: JPM - news) , Bank of America Corp and Wells Fargo (Berlin: NWT.BE - news) & Co.
Goldman's stock slid 2.2 percent to $174.79 and ranked asone of the Dow's biggest decliners, while Citigroup dropped 4.1percent to $52.74. The S&P financial sector index fell0.7 percent, making it the biggest loser among the S&P 500sectors.
"This group is very tied to the economy, and it makes itdifficult to argue that we could see a higher GDP ahead, giventhese," said Paul Nolte, managing director at Dearborn Partnersin Chicago. "The earnings picture, along with some recent data,suggests we haven't made it out of the very slow growth ratethat we've been seeing."
UnitedHealth Group Inc was the Dow's biggestdecliner, falling 3.2 percent to $72.47 even as the largest U.S.health insurer reported a higher fourth-quarter profit and said2014 earnings would improve.
CSX Corp shares also sank, dropping 7.4 percent to$27.07 a day after the major U.S. railroad reported profits thatmissed expectations.
The Dow Jones industrial average was down 78.16points, or 0.47 percent, at 16,403.78. The Standard & Poor's 500Index was down 4.45 points, or 0.24 percent, at 1,843.93.The Nasdaq Composite Index was down 0.64 of a point, or0.02 percent, at 4,214.25.
After a lackluster start to 2014 on concerns that stockvaluations may be too high after the S&P 500's rally of 30percent last year, the index surged 1.6 percent over the pasttwo sessions to close at a record high on Wednesday, its firstsince Dec. 31.
"Stocks are a little more expensive at these levels, but Idon't think we're overly due for a correction," said OliverPursche, president of Gary Goldberg Financial Services inSuffern, New York. "If we saw a pullback of even 10 percent, Iwould view that as a buying opportunity."
The stock of Best Buy Co Inc plunged 27.6 percent to$27.19, easily the S&P 500's worst performer after the world'slargest consumer electronics chain reported a drop in holidaysales and forecast a bigger-than-expected decline in quarterlyoperating margins.
In the latest economic data, the Consumer Price Index rose0.3 percent in December while the core CPI, which strips outvolatile food and energy prices, edged up only 0.1 percent,suggesting underlying inflation was muted.
Initial claims for state unemployment benefits slipped 2,000to a seasonally adjusted 326,000 in the week ended Jan. 11.Claims for the prior week were revised to show 2,000 fewerapplications received than previously reported, suggesting asharp slowdown in job growth in December was likely to betemporary.
The Philadelphia Federal Reserve Bank said its businessactivity index stood at 9.4 points in January, compared with 6.4in December. This month's reading exceeded the median forecastof 8.6 among economists polled by Reuters. But companies'outlook for the months ahead worsened.
In the deal arena, Apollo Global Management LLC saidit would buy CEC Entertainment Inc (NYSE: CEC - news) , the parent of theChuck E Cheese restaurant chain, for about $948 million. CECEntertainment's stock jumped 12.6 percent to $54.52. Incontrast, Apollo Global's shares declined 1.1 percent to $35.37.
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