The Dow and the S&P 500 fell on Thursday as some investors doubted that banks would sustain strong first-quarter performance as unease about the economy's health persist. Deal speculation sent the Nasdaq higher. Even though JPMorgan Chase & Co (JPM.N) posted stronger-than-expected quarterly results, analysts said there remained concerns that the banking sector may be buffeted by more credit losses. "The core business in the banking industry is very strong, but again it's the quality of the assets and the potential writeoffs that people aren't sure about," said Eric Kuby, chief investment officer at NorthStar Investment Management Corp in Chicago. "The news from JPMorgan was good but you're looking at a group of stocks that have had huge rally." The KBW Bank Index .BKX fell 1.33 percent, while Wells Fargo (WFC.N) slid more than 3 percent to $18.96. Shares of credit card companies also took a beating following down beat broker comments. American Express (AXP.N) dropped 3.2 percent to $19.94, putting the stock among the top drags on the Dow. Capital One (COF.N) dropped 5 percent to $16.44. The Dow Jones industrial average .DJI dropped 53.53 points, or 0.67 percent, to 7,976.09. The Standard & Poor's 500 Index .SPX fell 3.06 points, or 0.36 percent, to 849.00. The Nasdaq Composite Index .IXIC gained 4.97 points, or 0.31 percent, to 1,631.77. The Nasdaq was little changed as investors bet there could be more consolidation in the technology sector after a report that Sun Microsystems JAVA.0 is open to takeover talks with IBM (IBM.N). Although CNBC reported that IBM was apparently no longer interested in a talking to Sun Micro, investors held out hope that there may be other deal activity ahead. Sun Micro shares jumped 1.6 percent to $6.23.

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