Markets mixed on earnings
Cautious investors led Wall Street to mixed results Monday after Bank of America and National City released disappointing news and oil prices went on another record-breaking tear.
Investors were clearly uneasy about extending last week’s big gains after BofA said its first-quarter earnings fell 77% on write-downs and widening credit losses. BofA’s report followed a week in which big-name companies in general turned in better-than-expected numbers for the first quarter, helping the major stock indexes to gains of more than 4%.
Wall Street has at times worried that a slowing economy and a potentially hesitant consumer would crimp profits -- especially for the financial sector -- in the first three months of the year.
Shares of National City dropped nearly 28% after the Midwest bank said it received a $7-billion cash infusion from equity investors, lowered its dividend and posted a $171-million loss for the first quarter.
Still, the market performed relatively well, climbing back from an early plunge. Part of the reason was that not all the earnings were downbeat. Merck said its profit nearly doubled in the first quarter because of a $1.4-billion distribution from a partner drug company and a slight rise in sales.
With little in the way of economic data scheduled to arrive this week, investors are looking at a big flow of corporate reports for insights into the well-being of the economy.
At this point, investors remain cautious. The market appears stuck in a range, fluctuating as traders recoil at disappointing news but then take advantage of bargain prices.
“The percentage of cash on the sidelines as a percentage of market value is the highest it’s ever been,” said Richard E. Cripps, chief market strategist for Stifel Nicolaus. “We have an acute level of risk aversion by investors -- understandably so.”
The Dow Jones industrial average fell 24.34 points, or 0.2%, to 12,825.02, after being down as much as 98 points.
Broader stock indicators closed mixed. The Standard & Poor’s 500 index fell 2.16 points, or 0.2%, to 1,388.17, while the Nasdaq composite index rose 5.07 points, or 0.2%, to 2,408.04.
The technology-dominated Nasdaq got a boost from Apple, which rose $7.12, or 4.4%, to $168.16 after an RBC Capital Markets analyst lifted his price target for the stock and predicted that the company’s fiscal second-quarter results would surpass expectations.
Rising oil prices, meanwhile, weighed on some stocks, including airlines, but boosted energy companies including Exxon Mobil, which rose 26 cents to $94.26. Crude rose 79 cents to close at a record $117.48 a barrel on supply worries and speculative buying.
AMR, parent company of American Airlines, fell 57 cents, or 6.5%, to $8.20; United Airlines parent UAL fell $1.42, or 6.2%, to $21.43, and Continental Airlines fell $1.19, or 5.4%, to $20.67.
On the New York Stock Exchange, declining issues outnumbered advancers by about 9 to 7. Consolidated volume was light with 3.3 billion shares trading hands, down from Friday’s 4.1 billion. Volume was the lowest since Jan. 3, with many traders taking the day off for the Passover holiday.
Bond prices dipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.73% from 3.71% late Friday.
Gold rose $2.50 to $914.70 on the New York Mercantile Exchange. The dollar lost a penny against the euro, which traded at $1.592.
Bank of America said its profit totaled $1.21 billion, or 23 cents a share. Analysts had been expecting the company to report earnings of 41 cents a share. The stock fell 95 cents, or 2.5%, to $37.61.
National City shares tumbled $2.30 to $6.03.
The Russell 2,000 index of smaller companies fell 3.07, or 0.4%, to 718.00.
Japan’s Nikkei stock average rose 1.6%. Britain’s FTSE 100 fell 0.1%, Germany’s DAX declined 0.8%, and France’s CAC-40 fell 1%.
