Stocks fell, putting the S&P 500 on course for its biggest weekly declines this year, after disappointing economic data from China and rising borrowing costs in Spain damped sentiment in the face of better-than-expected earnings from Google, J.P. Morgan Chase and Wells Fargo.
The Dow Jones Industrial Average declined 56 points, or 0.4%, to 12930, in Friday afternoon trading. The Standard & Poor's 500-stock index lost nine points, or 0.7%, to 1378. The Nasdaq Composite shed 29 points, or 1%, to 3026, also on pace for the year's biggest weekly decline.
Stocks opened lower after data showed that China's economy expanded at its slowest pace in three years last quarter and as rising bond yields in Spain intensified investors' concerns about Europe's sovereign-debt issues.
"For one, we're not out of the woods yet, and people are still very nervous. You've got concerns with Europe, questions about who's going to be next after Greece, and Spain is looking terrible," said George Young, a partner at Villere & Co., an investment manager in New Orleans.
J.P. Morgan, Wells Fargo and Google all fell after posting better-than-expected quarterly results. J.P. Morgan fell after the bank reported first-quarter results that exceeded expectations, but recorded a 3.1% decline in net income. The bank raised its dividend and unveiled a $15 billion stock buyback.
Wells Fargo dropped after reporting first-quarter profit rose 13% on better-than-expected revenue growth that was bolstered by its mortgage-banking arm.
Financial-sector stocks led the market lower, with Bank of America, down 4.1%, the Dow's biggest decliner.
J.P. Morgan and Wells Fargo "came in with solid numbers, but not thesis-changing numbers, and you had the mitigating global factors that we're seeing and it's an excuse to fade the group," said Pete McCorry, senior trader at Keefe Bruyette & Woods.
Technology stocks like Hewlett-Packard, which was down 2.8%, also slumped.
Losses accelerated after a preliminary reading on U.S. consumer confidence fell short of expectations, but stocks pared the worst of the session's declines in the afternoon.
Google declined 4.1% after the Internet-search company reported first-quarter earnings and revenue that beat expectations late Thursday, though the average price it charged for each ad click was lower than expectations. The company also said it would create a new class of nonvoting stock that will be distributed to current shareholders as a dividend, effectively a 2-for-1 stock split.
Stocks' slump on U.S. exchanges followed sharp losses in Europe. The Stoxx Europe 600 fell 2.2%, and Spain's IBEX 35 slumped 3.6%, to a three-year low, after data showed Spanish bank borrowing from the European Central Bank surged to highs in March, a sign of withering demand from global investors. Yields on 10-year government Spanish bonds rose on the news, and insurance-like credit-default swaps on Spanish bonds climbed to a record.
Asian bourses mostly rose, but pared gains after China reported gross domestic product rose 8.1% in the first quarter, below forecasts for an 8.3% gain. China's Shanghai Composite rose 0.4%, and Japan's Nikkei Stock Average gained 1.2%.
Crude-oil prices eased 0.5%, to $103.09 a barrel, while gold prices slipped 1.2%, to $1,659.70 a troy ounce. The dollar rose against both the euro and yen. The yield on the 10-year Treasury note fell to 1.996% as prices rose.
In other corporate news, Coinstar rose 8.4% after the company raised its earnings and revenue forecasts for its first quarter and full year, saying it experienced increased consumer demand at its Redbox movie-rental kiosks.
Dow Chemical rose 2.5% after the company's board approved a 28% increase in the quarterly dividend, reflecting confidence in its prospects.
-By Chris Dieterich, Dow Jones Newswires; 212-416-2611; christopher.dieterich@dowjones.com
