GE, Bank of America post profit drops
By SARA LEPRO
Associated Press
Friday, October 16, 2009 11:42 AM PDT
NEW YORK — Stock futures moved slightly lower this morning after a bigger-than-expected loss from Bank of America Corp.
Bank of America said it lost more than $2 billion after preferred dividends in the third quarter, steeper than what analysts had been expecting. One of the largest recipients of government bailout funds, the bank also set aside more than $11 billion to offset bad loans.
The disappointing report followed weak results from General Electric, which said its profit dropped 44 percent in the most recent quarter, hurt by weakness in its financial unit, GE Capital. Though results were slightly better than analysts’ estimates.
Solid earnings reports from Google Inc., IBM Corp. and chip maker Advanced Micro Devices Inc. after the closing bell Thursday lent some support to the market.
Earnings reports from banks have been of particular focus for the market this week. Investors want to see signs that credit losses are stabilizing, which would indicate that consumers and businesses are having an easier time paying off their debts.
A surprisingly strong profit from JPMorgan Chase & Co. on Wednesday helped push the Dow Jones industrials over the 10,000 mark for the first time in a year, but slightly disappointing results from Citigroup Inc. and Goldman Sachs Group Inc. on Thursday weighed on shares for much of the day before the market moved higher in the last few minutes of trading.
Ahead of the market’s open, Dow Jones industrial average futures fell 45, or 0.5 percent, to 9,919. Standard & Poor’s 500 index futures fell 5.60, or 0.5 percent, to 1,084.20, while Nasdaq 100 index futures fell 4.75, or 0.3 percent, to 1,743.75.
Bank of America shares fell 67 cents, or 3.7 percent, to $17.43 in premarket trading, while GE shares gave up 38 cents, or 2.3 percent, to $16.41.
Markets overseas were mostly higher. Japan’s Nikkei stock average rose 0.2 percent, while Hong Kong’s Hang Seng index slipped 0.3 percent. In afternoon trading, Britain’s FTSE 100 rose 0.3 percent, Germany’s DAX index gained 0.5 percent, and France’s CAC-40 was up 0.2 percent.
Despite early losses Thursday, the Dow tacked on another 47 points, bringing its two-day advance to 191 points. Since bottoming in early March, the Dow is now up 53.7 percent.
While investors continue to show they are willing to put money into the market, seizing on any dips in stocks, that momentum could easily be disrupted by a string of worse-than-expected earnings.
Earnings reports have so far largely beat expectations. However, weak revenue at some companies has been worrisome to investors who want to see businesses increase their profits through sales growth not just cost-cutting. That would be the best evidence yet that the economy is improving.
Among the other reports Friday, Halliburton Co. said its profit tumbled 61 percent from a year ago, but its revenue improved this year, increasing 2 percent from the second quarter.
Meanwhile, toy maker Mattel Inc. said its third-quarter profit declined 3 percent because of weak demand for its toys.
Late Thursday, Google reported a record profit as revenue growth accelerated for the first time since the recession began in December 2007.
Though revenue dropped slightly at IBM, it wasn’t as big of a decline as analysts expected. The company also raised its 2009 forecast for the second time. Advanced Micro Devices also reported stronger-than-expected sales.
In other trading Friday, bond prices were little changed. The yield on the benchmark 10-year Treasury note held steady at 3.46 percent.
The dollar was slightly higher against other major currencies, while gold prices slipped.
Oil prices shed 40 cents to $77.18 in electronic premarket trading on the New York Mercantile Exchange.
