*

JPMorgan Chase ( JPM ) falls on NII forecast miss

*

Wells Fargo Citigroup down after lower Q1 profits

*

U.S. Steel dips after shareholders approve Nippon Steel ( NISTF )

merger

(Updates to market close)

By Stephen Culp

NEW YORK, April 12 (Reuters) - U.S. stocks sold off on

Friday after major U.S. banks' results failed to impress,

capping a week marked by market-moving inflation data, evolving

expectations for U.S. Federal Reserve policy, and looming

geopolitical tensions.

All three major indexes fell more than 1%, and registered

losses on the week.

"When we look at what's happened in the macro space,

inflation has taken a turn for the worse and that has put more

pressure on companies to deliver this earnings season," said

Mike Dickson, head of research at Horizon Investments in

Charlotte, North Carolina. "Everyone's a bit jittery with

intense focus on how good earnings need to be."

Results from a trio of big banks marked the unofficial

launch of first-quarter earnings season.

JPMorgan Chase & Co ( JPM ), the biggest U.S. bank by

assets, posted a 6% profit increase but its net interest income

forecast fell short of expectations. Its shares slid following

the report.

Wells Fargo & Co's ( WFC ) stock fell modestly after profits

dropped 7% as net interest income dropped on weak borrowing

demand.

Citigroup ( C/PN ) posted a loss after spending on employee

severance and deposit insurance.

Economic data this week, particularly Wednesday's

hotter-than-expected CPI report, has suggested that inflation

could be stickier than previously thought, prompting investors

to reset expectations about the timing and extent of the U.S.

Federal Reserve's rate cuts this year.

"It's a very real risk that we won't get any rate cuts

this year," Dickson said, adding that while he does not expect a

hike, the Fed would probably prefer to keep rates higher for

longer.

"There's just no data point that you can actually look

at right now that says the Fed should cut rates."

Boston Fed President Susan Collins said she expects a couple

of rate cuts this year, even though it could take inflation some

time to return to its targeted level.

Austan Goolsbee, president of the Chicago Fed, said he

remains focused on the Personal Consumption Expenditures (PCE)

report due on April 26 for a clearer picture of inflation's

progress toward the central bank's target.

Geopolitical tensions continue to simmer as Iran threatened

to take revenge on Israel for the April 1 airstrike on its

embassy in Damascus, adding momentum to the sell-off.

"Geopolitical risks are difficult to nail down but they

could keep energy prices elevated, which would not be helpful to

for the CPI situation."

The CBOE Volatility Index, a measure of investor

anxiety, hit its highest level since October 2023.

According to preliminary data, the S&P 500 lost 75.46

points, or 1.45%, to end at 5,123.60 points, while the Nasdaq

Composite lost 266.50 points, or 1.62%, to 16,175.09.

The Dow Jones Industrial Average fell 478.29 points, or

1.24%, to 37,980.79.

Advanced Micro Devices ( AMD ) and Intel ( INTC ) fell after

a report that Chinese officials told the country's largest

telecom firm earlier this year to phase out foreign chips by

2027.

U.S. Steel slid after shareholders voted to approve a

proposed merger with Nippon Steel Corporation ( NISTF ).