Stocks close mixed as Banks sink, Tech rebounds; Visa faces anti-trust investigation

Stocks finished the week in mixed fashion as the Dow Jones Industrial Average was weighed down by financial stocks, but the tech-heavy Nasdaq Composite rebounded following yesterday’s heavy selloff.

At Friday’s closing bell, the blue-chip Dow lost 0.7% to close at 32,628, while the Nasdaq gained 0.8% to 13,215.

The broader S&P 500 split the difference, dipping 0.1% to finish at 3,913.

Big banks turned lower after the Federal Reserve declined to extend a pandemic-era exemption that allowed them to hold less loss-absorbing capital on their books.

Since banks use the money to make money, the market typically shuns any increase in capital requirements, which lowers banks’ revenue potential. JPMorgan Chase (JPM, -2.3%) and Goldman Sachs (GS, -1.0%) were among Dow’s top laggards as a result.

Tech stocks, meanwhile, returned to their winning ways after a Thursday spike in bond yields stoked inflation fears that sent traders scrambling out of the highest-flying names. Facebook (FB, +4.1%) popped on news that it is working on a version of its Instagram site suitable for children under the age of 13.

Markets have been choppy this week with investors weighing brightening economic prospects on one hand and worries that interest rates will climb sooner than anticipated on the other.

Some investors are betting that inflation will rise as growth picks up and that it will remain elevated long enough to force the Federal Reserve to tighten monetary policy. Those concerns have led to a sharp selloff in the government bond market and spurred investors to exit tech and other high-growth stocks.

Meanwhile, the Justice Department is investigating whether Visa Inc. is engaging in anticompetitive practices in the debit-card market, a probe that casts a cloud over a core part of its business.

The department’s antitrust division has been gathering information and asking whether Visa, the largest U.S. card network, has limited merchants’ ability to route debit-card transactions over card networks that are often less expensive, according to people familiar with the matter.

Many of the department’s questions have focused on online debit-card transactions, but investigators have asked about in-store issues as well, the people said.

The probe highlights the important role of the so-called network fee that is invisible to consumers, lucrative for card companies, but a weight on merchants, who often pass on the fees in the form of higher prices to customers.

It comes as Justice Department antitrust enforcers across administrations have placed an emphasis on scrutinizing digital market activities including in the financial sector, and on investigating the business practices of dominant firms.

The stock closed down by 6.24% at $206.90