Dow falls triple digits; Weak earnings lower trading indexes
It was a hectic day on Wall Street today as earnings losses from Bank of America and weak growth from IBM pushed investors to sell. Add in concerns that China is considering restructuring its lending practices made for a down day on all the trading indexes.
The quasi communist country made news today as it is looking to increase the monitoring of its banks as it tries to prevent speculative bubbles in areas like real estate. This ties into the issue of inflation as restrictions in lending will keep the rate in check. Last week China took steps to restrict runaway lending as a way to cool that country’s rapid growth. Many insiders see this slowing down the overall global recovery of the current downturn we are experiencing.
Tech stocks backtracked from much of the gains they made on Tuesday as weaker than expected earnings from IBM dragged the tech sector down. The computer giant announced a 9% increase in revenue from last year, with a 1% increase in sales. Wall Street forecasters had predicted stronger growth from the company, as the gain in sales was seen with a cautious outlook. IBM expects earnings per share of at least $11 for 2010.
A bulk of the big banks reported their quarterly earnings today and results were mixed at best. Bank of America posted losses of up to $5.2 billion, citing the repayment of federal bailout money as the main culprit. The same explanation was given by Citigroup a few days earlier. Morgan Stanley seems to be turning the corner. After consecutive quarterly losses from 2008-2009 it announced today its second straight quarterly profit earning $617 million for the quarter. Wells Fargo was the big winner today as it reported strong quarterlies and netted $2.82 billion in profit. Forecasters had expected weak earnings but despite this and repaying TARP monies, the bank gained 8 cents a share.
The Dow Jones was hit hard today losing triple digits, down 122 at 10,603.15. The S&P 500 closed at 1,138.04, down 12 points. The NASDAQ followed down 29 closing at 2,291.
Gold took a big hit as well falling $27.40 to settle at $1,112.60 an ounce while oil fell $1.87 to settle at $77.62.
World Markets took a hit as well, Germany’s DAZ was down 124.95 points to close at 5,851.53, France’s CAC was down 80.72 points closing at 3,928.95 and London’s FTSE 100 lost 92.34 points closing at 5,420.80. In Tokyo, the Nikkei was unchanged closing at 10,737.52.