Wall Street retreats as banks, energy weigh

By Chuck Mikolajczak

NEW YORK (Reuters) - U.S. stocks dropped on Wednesday, retreating from their second-best daily performance of the year in the prior session after a batch of disappointing earnings reports and another drop in commodities.

Bank of America Corp declined 4 percent to $11.79 as the worst performer on the Dow after it reported a lower-than-expected first-quarter profit and revenue fell. The S&P financial index declined 1.3 percent.

Technology shares were also weaker in the wake of earnings from Intel Corp . Its shares slipped 0.8 percent to $21.74 after the chipmaker said its current-quarter revenue would decline as much as 8 percent and trimmed its 2013 capital spending plans.

 

"Markets may be down today because of some individual companies disappointing on earnings, but the overall earnings season is OK," said David Kelly, the chief global strategist for JPMorgan Funds in New York.

Brent crude slid a touch below $99 per barrel and copper dropped 2.5 percent as softer-than-expected data in the U.S. and China has heightened worry over demand.

The S&P energy index fell 1.5 percent as the worst performing S&P sector, weighed down by a 1.1 percent drop in ExxonMobil Corp to $85.71. The drop in oil prices has put Brent crude on pace for its sixth straight decline, with the price of both oil and copper down 4 percent for the week.

U.S. stocks had rallied on Tuesday as gold prices stabilized. Kelly cautioned the recent drop in commodities could be the result of a normalization of prices that had veered too far off course, rather than a cause for alarm in equities.

"It's important to note it's sort of a settling process here because a few things are out of whack. Gradually over time, things that didn't make sense are being removed from the scene. The huge punt we've seen in gold prices means that the market is coming back to some sort of sanity," Kelly said.

The Dow Jones industrial average dropped 103.06 points, or 0.70 percent, to 14,653.72. The Standard & Poor's 500 Index lost 13.70 points, or 0.87 percent, to 1,560.87. The Nasdaq Composite Index fell 33.02 points, or 1.01 percent, to 3,231.61.

Yahoo Inc rebounded from initial declines to climb 0.8 percent to $23.98 after the Internet company's first-quarter results.

According to Thomson Reuters data through Tuesday morning, of the 42 companies in the S&P 500 that have reported earnings to date for the first quarter of 2013, 66.7 percent have beaten analyst expectations. Over the past four quarters, 67 percent of companies beat estimates, while the average since 1994 is a 63 percent beat rate.

S&P 500 earnings are now expected to have risen 1.8 percent in the first quarter, based on actual results from 42 companies and estimates for the rest, up from a recent estimate of 1.1 percent growth.

Other S&P 500 companies expected to report on Wednesday include American Express Co , eBay Inc and Sandisk Corp .

Later in the session, investors will eye the Federal Reserve's Beige Book of economic conditions at 2:00 p.m. (1600 GMT).

(Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama and Nick Zieminski)