NEW YORK - Stock prices sank Thursday, dragged down by bank stocks after JPMorgan Chase & Co. reported that a slowdown in investment banking hurt its results in the third quarter.
An afternoon surge in technology stocks limited some of the losses.
The Dow Jones industrial average fell 40.72 points, or 0.4 percent, to close at 11,478.13. JPMorgan fell 4.8 percent. Other banks also fell. Citigroup Inc. dropped 5.3 percent, Morgan Stanley 4.4 percent and Bank of America Corp. 5.5 percent.
JPMorgan is widely considered the strongest U.S. bank, so its results don't bode well for other financial companies, said Jason Lilly, a portfolio manager at Rockland Trust Investment Management Group. JPMorgan's income fell 4 percent, hurt by a 31 percent plunge in investment banking fees.
An afternoon rally in technology stocks trimmed some of the market's losses. Yahoo Inc. rose 1 percent as investors speculated the company might be bought. Technology stocks in the Standard & Poor's 500 index rose 1 percent, the most of any industry group in the index. The technology-focused Nasdaq composite rose 15.51, or 0.6 percent, to 2,620.24.
"There's a mounting interest in Yahoo and that has filtered out into tech stocks," said Quincy Krosby, a market strategist for Prudential Financial.
There was other encouraging news from the technology industry. Apple Inc. rose 1.6 percent a day ahead of the release of its latest iPhone. Google's third-quarter earnings, released after the close of trading, soared past analyst expectations. The stock jumped 6.5 percent in after-hours trading.
The Standard & Poor's 500 index fell 3.59, or 0.3 percent, to 1,203.66. Financial stocks fell 2.4 percent, the most of the 10 company groups that make up the index.
Investors were also disappointed by a report that China's trade surplus narrowed for a second straight month in September. That suggests the Chinese economy is slowing more than previously thought, which could hurt demand for exports from the U.S.
In Europe, there was more progress toward strengthening a financial rescue fund aimed at shoring up the region's banks. Slovakia's parliament approved a measure that would release large amounts of money to European banks and governments before a full-blown crisis sets in. Slovakia had blocked the bill Tuesday, becoming the only one of the 17 countries that use the euro to do so.
Wall Street has been fearful for months that one of Europe's shakier economies - such as Greece or Spain - could collapse.
