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

By Victor Reklaitis, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks dropped again on Friday, building on the sharp selloff of a day earlier, weighed down by a disappointing earnings report from J.P. Morgan Chase & Co.

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

The S&P 500(SPX) was last down 7 points, or 0.4%, to 1,826 after briefly turning positive. The benchmark is on pace for a weekly drop of 2.1%. The Dow Jones Industrial Average (DJI) shed 84 points, or 0.5%, to 16,086, leaving it on track for a weekly decline of 2%.

The Nasdaq Composite(RIXF) was last down 18 points, or 0.5%, to 4,036 after wavering between small gains and losses. 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 2.2%.

While traders on Thursday went after biotech and other high-growth stocks with a vengeance, driving the Nasdaq to a 3.1% fall, Friday brought mixed action among tech names. Facebook Inc.(FB) was up 0.4%, and biotech Gilead Sciences Inc.(GILD) rose 4.2%, but Netflix Inc.(NFLX) fell 0.7%, and Apple(AAPL) slipped 0.6%.

Shares in J.P. Morgan (JPM) lost 3.2% after the banking giant reported first-quarter earnings below market expectations, making it the worst performer among Dow components. Meanwhile, Wells Fargo (WFC) rose 1.2% 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, topping 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.

Follow MarketWatch's live blog of Friday's action

"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, not much 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, Peter Cardillo, chief market economist at Rockwell Global Capital, maintained this week is just the beginning of a sizable slide for stocks.

"What happened yesterday is the start of a correction, an earnings-driven correction," he told MarketWatch. He said first-quarter earnings won't be "overly terrible," but the latest batch of results, hurt by severe winter weather, will come in worse than in prior quarters.

Cardillo predicts the S&P 500 could fall 6% to 8% below Wednesday's close, which was around 1,872. "I don't think we go beyond that," he said, referring to a decline of 6% to 8%. (Read more: Bank of America strategists sees correction in autumn, not now http://blogs.marketwatch.com/thetell/2014/04/11/a-bigger-10-15-correction-is-coming-this-autumn-bank-of-america-merrill-lynch/.)

Gap Inc.(GPS) was a notable loser among S&P 500 stocks on Friday, falling 2.4% but recovering from a deeper intraday loss. The clothing retailer reported a disappointing 6% decline in its March same-store sales.

Among other key movers, the iShares Nasdaq Biotech ETF(IBB) switched between gains and losses. The ETF was last up 0.4%, but still down 1.2% for the week.

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 closed down 1.4% on Friday, losing 3.1% on the week.

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

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