* JP Morgan, Wells Fargo shares fall after results
* Retail sales unexpectedly drop
* Investors lock in gains after record highs
* Indexes down: Dow 0.3 pct, S&P 0.6 pct, Nasdaq 0.6 pct
By Angela Moon
NEW YORK, April 12 (Reuters) - U.S. stocks fell on Friday
from the previous session's record levels after an unexpected
drop in retail sales last month and lackluster results from two
The rally that has taken the S&P 500 index more than 11
percent higher this year has made stocks vulnerable to a
"It's not surprising to see profit-taking here going into
the weekend, especially after the run we had this week," said JJ
Kinahan, chief derivatives strategist at TD Ameritrade in
The CBOE volatility index VIX, Wall Street's
so-called fear gauge, rose 4 percent to 12.73. For the year, the
Dow has gained more than 13 percent and the Nasdaq is up 8.7
"With the S&P 500 flirting at 1,600 level, it would be very
difficult for companies to blow away the market with earnings.
The cautious outlook, that we are going to soon see a selloff,
is well reflected in the jump in VIX," Kinahan said.
JP Morgan Chase and Wells Fargo were the
biggest companies to report so far, as earnings season got under
way. Shares of both banks fell and the financial sector
lost 0.9 percent.
Material and energy stocks were pressured as oil prices sank
to an eight-month low as the outlook for global oil demand
Among commodity related stocks, Alcoa Inc was down
1.6 percent at $8.19 and Chevron Corp fell 0.8 percent
The Dow Jones industrial average was down 44.20
points, or 0.30 percent, at 14,820.94. The Standard & Poor's 500
Index was down 9.56 points, or 0.60 percent, at
1,583.81. The Nasdaq Composite Index was down 18.07
points, or 0.55 percent, at 3,282.08.
But the decline still put the S&P 500 up about 2.4 percent
for the week, and the Dow up about 1.8 percent and Nasdaq up
about 2.4 percent.
Data showed retail sales fell 0.4 percent in March, while
February's strong gain was revised down slightly. Consumer
spending plays a key role in the U.S. economy, accounting for
two-thirds of activity.
Another report showed consumer sentiment fell to a
nine-month low in early April amid gloom about the long-term
health prospects for the U.S. economy.
Investors have been rattled by indications economic growth
could be softening, particularly after last week's disappointing
jobs number, though that has not derailed the market rally so
The advance in equities in recent months was partly buoyed
by the Federal Reserve's economic stimulus efforts, and analysts
are viewing the first-quarter earnings season as a test for
whether those gains are justified by corporate performance.
JP Morgan reported higher first-quarter profit, though
revenue declined. The bank's stock was off 0.1 percent to
Wells Fargo's profit was better-than-expected but it made
fewer home loans. Its shares were down 1.8 percent at
Earnings for S&P 500 companies are expected to grow at a
modest 1.2 percent in the first quarter, down from more than 4
percent forecast in January, according to Thomson Reuters data.