Wall St hit by Bank of America, GE results

Written by Reuters
Saturday, 17 October 2009 19:45

NEW YORK: U.S. stocks fell on Friday, Oct 16 after disappointing results from General Electric Co and Bank of America Corp demonstrated the road to economic recovery will be bumpy, according to Reuters.

GE, which sells products from aircraft engines to refrigerators, reported a 20% drop in revenue, while Bank of America posted a US$1 billion loss as both struggled with still meager business and consumer spending.

"As you came into the third quarter there was hypersensitivity to the quality of topline growth," said Michael Feser, president of Zecco Trading in New York.

"Investors are linking that to the economy, trying to determine if these are quality earnings that are being reported and does it spell a solid economic recovery?"

Friday's results contrasted sharply with those of JPMorgan Chase & Co and Intel Corp earlier this week, which breezed past Wall Street forecasts and helped the Dow to close above 10,000 for two straight days.

The Dow Jones industrial average fell 67.03 points, or 0.67 percent, to 9,995.91. The Standard & Poor's 500 Index lost 8.88 points, or 0.81 percent, to 1,087.68. The Nasdaq Composite Index gave up 16.49 points, or 0.76 percent, at 2,156.80.

Analysts said investors may have become too optimistic going into the earnings season, in contrast to the second quarter when the bar was set low. The search for revenue growth has been a key theme after the last two quarters were characterized by cost cutting.

Bank of America's shares fell 4.6 percent to US$17.26, and GE dropped 4.2 percent to US$16.08. - Reuters