US stocks finished lower on Wednesday, led by a drop in the Nasdaq, with technology shares declining as investors moved into more defensive areas, while bank stocks extended recent losses following some mixed quarterly results.

The S&P 500 bank index dropped, with shares of Wells Fargo down 4.6 percent after the company missed fourth-quarter profit expectations.

Citigroup and Bank of America shares also fell, even after the companies beat Wall Street estimates for fourth-quarter profit.

Financials including the banks, which were up sharply in 2025, have fallen this week amid concerns over US President Donald Trump's proposed cap on credit-card interest rates, which JPMorgan executives warned could squeeze consumers and hurt financial sector profits.

"After a nice run, and so-so or mediocre earnings, you're seeing profit-taking and consolidation" in the banks, said Michael O’Rourke, chief market strategist at JonesTrading in Stamford, Connecticut. "Generally speaking, people are still optimistic on the group."

In addition, he said, the credit-card cap plan may never go forward, but "none of the bank executives could rule it out."

In tech, he said, investors are looking to rotate out of expensive megacaps and into value and more defensive names.

S&P 500 financials fell along with the S&P 500 technology sector while more defensive groups including consumer staples rose.

The small-cap Russell 2000 index, which has been sharply outperforming the benchmark S&P 500 so far this year, hit a record closing high, along with the S&P 500 industrials index.

The S&P 500 fell 0.5 percent, to 6,926, the Dow fell 0.1 percent, to 49,149, while the Nasdaq fell 1 percent, to 23,471. (Reuters)