U.S. stocks were down on Wednesday as financials tumbled after JPMorgan and Bank of America hinted at revenue weakness in the current quarter and oil prices fell to a three-week low.
JPMorgan (JPM.N) blamed lower volatility for the decline in trading revenue, while Bank of America (BAC.N) said trading revenue in the second quarter was on track to be 10-12 percent lower than last year.
Measures of market volatility are at rock-bottom, hitting trading desks at big banks. The U.S. stock market’s main gauge of investor anxiety .VIX closed at its lowest level in over two decades on May 8.
“There is a choppy sideways market due to the fact that fundamentals are largely unchanged and expectations of market friendly policies in the U.S. are being pushed to 2018,” said Stephen Wood, chief market strategist, North America, Russell Investments.
Financials, which have largely outperformed the broader market on bets of fiscal stimulus and simpler banking regulations under President Donald Trump, are on track to decline 0.7 percent so far this year.
JPMorgan (JPM.N) was down 2 percent on Wednesday. Goldman Sachs (GS.N) fell 3 percent and was the biggest drag on the Dow. Bank of America (BAC.N) was down 2.5 percent.
Adding to the pressure, oil prices fell as rising Libyan production fueled concerns that OPEC-led output cuts are being undermined by several countries that are excluded from the deal. [O/R]
“With oil also down, the thoughts of an economic slowdown start to come up in people’s minds and has created a pause in the market euphoria,” said Andre Bakhos, managing director at Janlyn Capital in Bernardville, New Jersey.
Seven of the 11 major S&P sectors were lower, with the financial index’s .SPSY 1.13 percent fall leading the decliners.
At 12:31 a.m. ET, the Dow Jones Industrial Average .DJI was down 30.8 points, or 0.15 percent, at 20,998.67, the S&P 500