MARKET SNAPSHOT: U.S. Stocks Extend Fall; S&P Set For 2% Weekly Drop

By Victor Reklaitis, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks dropped again Friday after the prior session's sharp selloff, weighed down by a disappointing earnings report from J.P. Morgan Chase & Co. and further selling in tech names.

Better-than-expected profit from another banking giant, Wells Fargo & Co., helped to keep losses in check. Sentiment also got a boost from bigger-than-expected rises for gauges that track inflation and how consumers feel about the health of the economy.

The S&P 500(SPX) was last down 10 points, or 0.5%, to 1,823, putting the benchmark on pace for a weekly drop of 2.3%. The Dow Jones Industrial Average (DJI) shed 103 points, or 0.6%, to 16,067, leaving it with a weekly decline of 2.1%.

The Nasdaq Composite(RIXF) fell 33 points, or 0.8%, to 4,022. The tech-laden index, which on Thursday endured its biggest one-day percentage drop since November 2011, is on track for a drop for the week of 2.6%. Notable Nasdaq losers on Friday included Facebook Inc.(FB), down 0.8%; Netflix Inc.(NFLX), off 2.7%; and Apple(AAPL), slipping 1%.

Traders on Thursday brushed aside an upbeat report on weekly jobless claims, and went after biotech and other high-growth stocks with a vengeance, driving the Nasdaq to a 3.1% fall. The S&P 500 dropped 2.1%, falling below its 50-day moving average.

On Friday, shares in J.P. Morgan (JPM) lost 3.4% after the banking giant reported first-quarter earnings below market expectations, while Wells Fargo (WFC) rose 0.5% after its quarterly profit beat forecasts.

In U.S. economic news, the Labor Department said the producer-price index gained 0.5% in March, topping the 0.1% increase seen by economists polled by MarketWatch. The Federal Reserve wants inflation to rise, but the central bank hasn't had much success in nudging it higher, so officials likely welcomed Friday's news on wholesale prices.

A consumer sentiment gauge rose to a preliminary April reading of 82.6, beating expectations. Economists polled by MarketWatch had expected a preliminary April level of 80.8 for the sentiment index from the University of Michigan and Thomson Reuters.

Debate over what's next

Some market watchers see further pain for stock investors, but others have stayed bullish. The sharp slide that started in so-called momentum stocks has many talking about a shift in leadership to value from growth now that the current bull market is more than five years old.

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"While the market is roughly flat for the year, the recent leadership rotation is causing understandable angst for many investors," said Jonathan Golub, chief U.S. market strategist at RBC Capital Markets, in emailed comments Friday. "We remain comfortable with our 2,075 S&P 500 target and cyclical sector bias including overweights in Financials, Industrials, Discretionary and Health Care."

Golub argued that fundamentally, nothing has changed.

"We would be more apt to change this outlook if we saw signs of either fundamental deterioration in the economy or indications that Fed policy was negatively impacting markets," he said in his note. "Neither of these conditions are present, in our view."

On the other hand, technical analyst Jonathan Krinsky warned against "assuming the low is in." Looking at futures for the S&P 500 (SPM4), he sees the potential for a move down to 1,793. Krinsky, chief market technician at MKM Partners, wrote in a note Friday that "to us it still doesn't feel as if THE low is in." (Read more: These are heady times for broken clocks http://blogs.marketwatch.com/need-to-know/2014/04/11/bank-earnings-a-nikkei-death-cross-and-broken-clocks-rejoice/.)

Thursday's sharp selloff for Wall Street markets triggered heavy selling elsewhere. In Tokyo, the Nikkei 225 index slid 2.4%, hitting a low for the year so far. The Stoxx Europe 600 was down nearly 2%, headed for a loss of more than 3% on the week.

Across other markets, oil prices (CLK4) moved higher, while the dollar gained against its major rivals. Gold (GCM4) edged lower.