Equities Tumble, Pressured by Earnings, Consumer Sentiment

Includes: BAC, BP, C, DIA, GLD, GS, QQQ, SPY, VVUS
by: Midnight Trader

4:04 PM, Jul 16, 2010 --

  • DJIA down 261.49 (-2.52%) to 10,356.20
  • S&P 500 down 31.61 (-2.88%) to 1,064.87
  • Nasdaq down 70.03 (-3.11%) to 2,179.05


  • Hang Seng down 0.03%
  • Nikkei down 2.86%
  • FTSE down 1.01%


(-) C beats with Q2 EPS, meets with revenue.

(-) BAC results below year-ago levels, EPS does beat Street.

(-) GOOG continues evening decline after mixed results.

(-) VVUS sees continued sharp decline in response to FDA panel ruling
against diet drug.

(-) GE down but off worst levels; beat with Q2 results.

(-) BP says leaking well is capped but officials cautious.

(-) MAT misses with earnings.


(+) GS settles with SEC over CDO charges.

(+) ARNA gains on negative ruling for rival VVUS diet drug.


A batch of mixed earnings reports from the likes of GE (NYSE:GE), Bank of America (NYSE:BAC), Citigroup (NYSE:C) and Google (NASDAQ:GOOG) combined with a deeper-than-expected drop in consumer sentiment to drive stocks lower on Friday. The banks were the prime driver behind the earnings-driven declines as investors worried over lower trading revenue at the financial firms. On the consumer sentiment side, consumers were much more pessimistic in July as the University of Michigan sentiment index slumped to 66.5 from 76. Expectations were for a reading of 74.3.

The consumer-price index also dropped to a seasonally adjusted 0.1%, the third straight monthly decline, according to Labor Department report this morning, fueling concerns about deflation. But the more closely followed core rate rose 0.2%. It excludes volatile food and energy prices and is seen as a better gauge of inflation. Economists surveyed by MarketWatch had predicted a flat reading in overall consumer prices and a 0.1% increase in the core rate.

Earnings season kicks into high gear next week as a hefty crop of top names report quarterly financials. On Monday, IBM (NYSE:IBM) and Texas Instruments (NYSE:TXN) are due with numbers, followed by Apple (NASDAQ:AAPL), Goldman Sachs (NYSE:GS), Harley-Davidson (NYSE:HOG) and Yahoo (NASDAQ:YHOO) on Tuesday. eBay (NASDAQ:EBAY), Morgan Stanley (NYSE:MS), Netflix (NASDAQ:NFLX), Qualcomm (NASDAQ:QCOM) and Starbucks (NASDAQ:SBUX) are slated to post financials on Wednesday. On Thursday, traders will see quarterly results from Amazon.com (NASDAQ:AMZN), Caterpillar (NYSE:CAT), Microsoft (NASDAQ:MSFT) and UPS (NYSE:UPS), followed by McDonald's (NYSE:MCD) and Verizon (NYSE:VZ) on Friday.

On the economic front, data flow is light next week, with building permits and housing starts due for release Tuesday, followed by crude inventories on Wednesday. Initial claims, existing home sales and leading indicators will be distributed on Thursday.

Elsewhere in today's market, BP Plc (NYSE:BP) said its damaged Gulf of Mexico well, which has gushed crude since April had showed no signs of oil leaks since the company tightened a new cap into place, The New York Times reported. A BP executive said that pressure had built up inside the well as BP engineers had predicted and hoped it would.

Bank of America (BAC) and Citigroup (C) shares declined even as both banks posted better-than-expected results on lower credit losses after investors saw challenges for the two banks to raise revenue in a tough economy, Reuters reports.

Vivus Inc. (NASDAQ:VVUS) was hammered lower after an FDA panel voted against its diet pill, Qnexa, due to concerns about serious side effects.

Goldman Sachs (GS) bucked the broader market and the banking sector, up 2% on the heels of its deal with the Securities and Exchange Commission to settle a civil fraud suit for $550 million.

Crude-oil for August delivery ended down 0.8%, or $0.61, to $76.01 a barrel on the New York Mercantile Exchange.

In other energy futures, heating oil fell 0.41%, or $0.05, to $2.01 a gallon while natural gas fell 1.1%, or $0.05, to $4.53 per million British thermal units.

Meanwhile, gold futures fell to their lowest level since May.

Gold for August delivery fell $20.10, or 1.7%, to $1,188.20 an ounce. In other metal futures, silver fell $0.51, or 2.8%, to $17.85 a troy ounce while copper fell 3% to $2.93 a pound.