Bank of America, GE push US stocks lower

Bank of America, GE push

By JERUSALEM POST STAFF
Published: OCTOBER 18, 2009 10:17
SHARES WALL STREET Stocks ended a strong week with a flash of selling after Bank of America Corp. and General Electric Co. signaled that US businesses and consumers are still struggling to pay off their debts. Stocks slid Friday as quarterly results from the companies dented hopes that corporate earnings would show strong signs of improvement in the July-September period. A rise in oil also helped the market end well off its lows, following a similar pattern from earlier in the week. The Dow Jones industrial average fell 67 points to close just below the 10,000 mark, which it had broken through on Wednesday for the first time in a year. Despite the declines stocks still posted big gains for the week. Bank of America lost more than $2 billion after preferred dividends in the third quarter. The loss was steeper than expected and stirred fears that struggling consumers won't be able to increase their spending. The bank, one of the largest recipients of US government bailout funds, said its losses from failed loans came to almost $10b. Rivals Citigroup Inc. and JPMorgan Chase & Co. also posted higher loan losses last week that underscored the challenges brought by high unemployment, weak consumer spending and diminished home values. The Dow fell 67.03, or 0.7 percent, to 9,995.91 after being down as much as 123 points earlier in the day. The broader Standard & Poor's 500 index fell 8.88, or 0.8%, to 1,087.68, and the Nasdaq composite index fell 16.49, or 0.8%, to 2,156.80. A drop in the mood of consumers fanned concerns that people nervous about jobs and the economy will hold off spending. The Reuters/University of Michigan consumer sentiment index fell to 69.4 in a preliminary reading for October from 73.5 in September. General Electric's profit dropped 44%, hurt by much lower earnings at its financial arm, GE Capital. For the week, the Dow rose 1.3%, the S&P 500 index added 1.5% and the Nasdaq rose 0.8%. The Bank of America and GE reports overshadowed solid results from Google Inc. that arrived after the closing bell Thursday. Bank of America fell 84 cents, or 4.6%, to $17.26, while GE gave up 71 cents, or 4.2%, to $16.08. Most earnings from the third quarter have topped expectations, but the heaviest weeks of reports are yet to come. Reports are due this week from hundreds of companies ranging from Coca-Cola Co. to Microsoft Corp. Investors also will get data on home construction, sales of existing homes, inflation as well as a region-by-region look at the economy from the Federal Reserve. In other earnings news, Google reported a record profit as revenue growth accelerated for the first time since the recession began in December 2007. The stock advanced $19.94, or 3.8%, to $549.85. During trading, it rose to $554.75, a 12-month high. IBM Corp. fell $6.34, or 5%, to $121.64 after the company signaled that its business is improving but still down from where it had been. The value of services contracts that the company signed in the third quarter fell 7% from a year earlier. EUROPE The FTSE 100 index of leading British shares closed down 32.71 points, or 0.6%, at 5,190.24 while Germany's DAX fell 87.38 points, or 1.5%, to 5,743.39. The CAC-40 in France was 56.23 points, or 1.5%, lower at 3,827.60. ASIA Thailand's market rebounded after falling 7% over two days amid panic about the health of 81-year-old King Bhumibol Adulyadej. Japan's benchmark Nikkei 225 stock average rose 18.91 points, or 0.2%. South Korea's Kospi dropped 1.1% and Australia's benchmark fell 0.5%. CURRENCIES The 16-nation euro dropped to $1.4899 in late New York trading from $1.4931 Thursday, while the dollar edged up to 90.85 Japanese yen from 90.65 yen. The pound, meanwhile, gained to $1.6353 from $1.6268. Also on Friday, the government said that foreigners continued to buy long-term US financial assets in August, although China, the No. 1 holder of US Treasurys, cut its holdings of government debt. In other late New York trading, the dollar rose to 1.0381 Canadian dollars from 1.0331 Thursday, and gained to 1.0179 Swiss francs from 1.0155 francs. COMMODITIES Gold prices wavered in a narrow range throughout the day before settling up 90 cents at $1,051.50 an ounce on the New York Mercantile Exchange. Prices, which hit a new high of $1,072 on Wednesday, were roughly flat for the week. Oil prices finished above $78 per barrel for the first time in a year and posted their largest weekly rise since the height of the summer driving season. Light, sweet crude for November delivery rose 95 cents to settle at $78.53. Oil prices have jumped more than 9% during the past week as the dollar sank.