January 15, 2015 / 2:58 PM / 3 years ago

US STOCKS-Wall St drops after Swiss move; banks tumble

* Bank of America, Citi down after results

* Initial jobless claims rise

* Indexes off: Dow 0.37 pct, S&P 0.41 pct, Nasdaq 0.62 pct (Updates to market open)

By Chuck Mikolajczak

NEW YORK, Jan 15 (Reuters) - U.S. stocks fell, erasing small gains at the open on Thursday, as investors grappled with a move by the Swiss National Bank to scrap its three-year euro cap on the franc.

Trading was likely to remain volatile through the session, on the heels of choppy premarket action that saw futures fluctuate between gains and losses, after the SNB said it would discontinue the cap it introduced on Sept. 6, 2011 to fight recession and deflation threats.

Swiss stocks traded in the U.S. moved higher, including UBS , up 2.4 percent at $16.87, Credit Suisse, up 3.2 percent at $23.55 and Novartis, up 1.9 percent to $98.64, as a strengthening Swiss franc made U.S.-dollar denominated stocks cheaper.

“The Swiss move was obviously the big move, people are trying to get their arms around what it means for the U.S. stock market,” said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

“It will take some of the morning to sort out the impact of the Swiss move across the board.”

Financials, off 0.6 percent, were the worst performing S&P sector. Bank of America lost 3.7 percent to $15.45 after the second-largest U.S. bank by assets reported a 14 percent slump in quarterly profit. Citigroup shares fell 2.9 percent to $47.64 after its quarterly results.

Dow component Intel Corp is scheduled to report after the market closes.

Expectations for U.S. fourth-quarter earnings have fallen sharply in recent months, with growth now estimated at just 3.6 percent compared with an Oct. 1 estimate for 11.2 percent, according to Thomson Reuters data.

The Dow Jones industrial average fell 64.12 points, or 0.37 percent, to 17,362.97, the S&P 500 lost 8.26 points, or 0.41 percent, to 2,003.01 and the Nasdaq Composite dropped 28.73 points, or 0.62 percent, to 4,610.59.

The benchmark S&P has fallen for four straight sessions and nine of the past 11 days. The index is down more about 4 percent from its last record high Dec. 29. The CBOE Volatility index is on track for a fifth day of gains.

U.S. producer prices posted their biggest drop in more than three years in December, while weekly initial jobless claims rose, but still indicated an improving job market. Separately, New York Federal Reserve said its Empire State general business conditions index rose in January.

The Philadelphia Federal Reserve Bank’s reading on factory activity is due at 10:00 a.m. (1500 GMT).

Best Buy shares tumbled 15.1 percent to $33.88 as the worst performing S&P 500 component after the electronics retailer posted holiday sales results and said it expects same-store sales growth to be flat to negative in the first two quarters of its fiscal year.

U.S.-listed shares of Blackberry dropped 15.8 percent to $10.61 after South Korea’s Samsung Electronics said it had no plan to buy the smartphone maker, denying a Reuters report on a takeover approach.

Declining issues outnumbered advancing ones on the NYSE by 1,389 to 1,361, for a 1.02-to-1 ratio; on the Nasdaq, 1,498 issues fell and 691 advanced for a 2.17-to-1 ratio.

The benchmark S&P 500 index was posting 18 new 52-week highs and 8 new lows; the Nasdaq Composite was recording 17 new highs and 22 new lows.

Editing by Bernadette Baum

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