Stocks Fall After BofA and GE Earnings

NEW YORK - Wall Street dropped on Friday after disappointing quarterly results from Dow components General Electric Co (GE) and Bank of America Corp (BAC) dragged stocks lower.

GE's weaker-than-expected revenue and Bank of America's loss show U.S. businesses and consumers continue to struggle as the economy slowly recovers from the worst recession in decades.

The results were also a setback for investors wowed by some strong corporate earnings earlier in the week. Friday's earnings set the stage for profit taking after a strong run this week that saw major indexes hit new yearly highs and pushed the Dow industrials above 10,000.

To see GE's revenue down so much "really says something about the economy, and really has to make you question what kind of recovery is taking place here," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"It's not a good morning to say the least," he said.

Bank of America's loss stemmed from consumer credit losses, and it blamed "continued weakness in the U.S. and global economies and stress on the consumer." GE, although beating earnings estimates, reported-lower than-expected revenue as sales fell across all its diverse businesses.

Bank of America's shares fell 5.4 percent to $17.12, and GE dropped 2.6 percent to $16.35 in premarket trade.

In afternoon trading, the Dow was down 67.33 points, or 0.67 percent, to 9,995.61. The S&P 500 fell 8.63 points, or 0.79 percent, to 1,087.93, while the Nasdaq dropped 15.46 points, or 0.71 percent, to 2,157.83.

"Although it is still very early into earnings season, we're seeing that the positive momentum is rapidly diminishing," said Hans-Juergen Delp, chief strategist at Commerzbank in Frankfurt.

Safe-haven U.S. treasuries rose after the results. The dollar, which has traded inversely to stocks, with equities rising as the greenback fell, rose, sparking profit-taking in currencies that earlier hit multi-month highs against the U.S. unit.

The U.S. dollar rose 0.43 percent against a basket of currencies. That and demand concerns weighed on commodity prices.

"The dollar is up, that generally causes a flow out of equities," said Tom Schrader, managing director, U.S. equities at Stifel Nicolaus Capital Markets in Baltimore.

Google Inc (GOOG) reported robust Q3 results that beat expectations late on Thursday, soothing concerns over the health of the technology sector. Google's stock rose more than 3 percent in premarket trade.

International Business Machines Corp also (IBM) sounded an optimistic note as it forecast a return to revenue growth in the fourth-quarter, but investors drove the stock down 4.5 percent in premarket trade.

The Reuters/University of Michigan preliminary index of consumer sediment dropped unexpectedly to 69.4 in early October, from 73.5 in September.

However, the Federal Reserve said industrial production rose 0.7 percent in September, topping economists' expectations of a 0.2 percent increase

Source: Reuters

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