Wells Fargo & Company (WFC) shares fell more than 1% in early trading on Friday after the bank reported mixed second quarter financial results. The move follows similar declines in other banking stocks, including JPMorgan Chase & Co. (JPM) and Citigroup Inc. (C), although these stocks recouped much of their early losses by mid-day Friday. Investors are concerned that higher interest rates could have a negative impact on interest margins moving forward.

During the second quarter, Wells Fargo reported revenue of $22.17 billion – missing consensus estimates by $300 million – although earnings per share of $1.07 beat consensus estimates by six cents per share. The market is also concerned about further enforcement action from regulators looking into the bank's cross-selling scandal, as well as downward pressure in future months after competitors cast a weak outlook. (See also: Wells Fargo Tops Q2 Earnings Estimates, Costs Flare Up.)

Technical chart showing the performance of Wells Fargo & Company (WFC) stock

From a technical standpoint, the stock moved lower from its reaction highs at around $56.00 to trendline and pivot point support at $54.36. The relative strength index (RSI) is neutral at about 51.29, but the moving average convergence divergence (MACD) may be at risk of reversing its uptrend dating back to early June. Traders should maintain a bullish bias given the stock's strong support levels, but the bearish second quarter report could lead to a breakdown.

Traders should watch for a rebound from trendline and pivot point support levels to upper trendline and R1 resistance at $57.65. If the stock breaks down, shares could move to S1 support at $52.11 or lower trendline support at $51.00. Traders should keep an eye on the evolving regulatory situation, especially after Federal Reserve Chairwoman Janet Yellen indicated earlier this week that the bank could face further consequences. (For additional reading, see: Citi, JPMorgan and Wells Show Reliance on D.C.)

Charts courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.