Wall Street opens lower on Microsoft report
Stocks fell sharply Thursday as more bad news about earnings and worries about the banking industry wiped out any attempts at a rally. The Dow Jones industrial average fell as much as 271 points before ending down 105.
Setting the tone for the day, Microsoft reported its fiscal second-quarter earnings early -- and the news was not good. The software giant, citing deteriorating global economic conditions, posted an 11% drop in profit and said it would slash 5,000 jobs over the next 18 months.
Many bank stocks took another beating Thursday as uneasiness about the sector continued to plague investors. Reports showing steep profit declines and big loan losses have investors worried that the financial crisis is far from over. An index of 24 bank stocks slumped 5.9%.
More downbeat economic readings, including an increase in the weekly number of new unemployment claims and a sharp drop in home construction activity, added to the day’s gloom.
Investors found some encouragement after two House committees prepared President Obama’s economic stimulus plan for a floor vote next week.
The Dow fell 105.30 points, or 1.3%, to 8,122.80. The Standard & Poor’s 500 index fell 12.74 points, or 1.5%, to 827.50, while the technology-heavy Nasdaq composite index dropped 41.58 points, or 2.8%, to 1,465.49.
The Russell 2,000 index of smaller companies sank 3%.
Declining issues outnumbered advancers by about 4 to 1 on the New York Stock Exchange.
Yields on Treasury bonds rose after Treasury Secretary-designate Timothy Geithner accused China of manipulating its currency. His comments raised fear of a new U.S.-China row over trade that could sap Beijing’s appetite for U.S. government debt, forcing the Treasury to pay higher interest rates.
The yield on the benchmark 10-year Treasury note rose to 2.59% from 2.52% late Wednesday.
The dollar rose against other major currencies, while gold prices rose.
Oil futures rose 12 cents to settle at $43.67 a barrel on the New York Mercantile Exchange.
Regional bank Fifth Third Bancorp plunged 29% after reporting a $2.2-billion fourth-quarter loss blamed on bad loans.
Bank of America sank 15% after disclosing that John Thain, the former chief executive of Merrill Lynch, which the company recently acquired, had resigned. Bank of America had cited a $15-billion fourth-quarter loss at Merrill as the reason BofA needed a second infusion of capital from the federal government.
Among other big decliners in the financial sector, Citigroup tumbled 15%.
Tech shares took a hit after Microsoft’s report.
Microsoft dropped 12% after releasing earnings, pushing the overall tech sector lower. But Apple gained 6.7% after the company late Wednesday reported record profit that topped analysts’ projections.
Overseas, key stock indexes fell 0.2% in Britain, 1% in Germany and 1.2% in France. Shares rose 1.9% in Japan.
