Wed | Jun 23, 2021

Stocks drop on mixed news on profits

Published:Friday | April 20, 2012 | 12:00 AM

A slew of United States companies announced big profits Thursday, but investors spooked about the economy sold stocks anyway.

Investors shifted between buying and selling early, then stuck with selling after deciding that the strong earnings results weren't enough to make up for weak reports on jobs, housing and manufacturing.

The Dow Jones industrial average fell 68.65 points, or 0.5 per cent, to close at 12,964.10. The broader Standard & Poor's 500 index dropped 8.22 points, or 0.6 per cent, to 1,376.92.

Morgan Stanley rose 2.3 per cent after it beat Wall Street's earnings and revenue estimates. UnitedHealth Group Inc rose 2.4 per cent after reporting higher profits. EBay, Southwest Airlines and Bank of America also beat forecasts.

Stock indexes fell after two relatively weak economic reports came out mid-morning. An index of regional manufacturing compiled by the Philadelphia branch of the Federal Reserve dropped sharply, and the National Association of Realtors said home sales fell 2.6 per cent last month.

Earlier, the Labor Department said applications for unemployment benefits dipped 2,000 to 386,000. When the number is above 375,000, investors take it as a sign that hiring isn't strong enough to lower the unemployment rate.

"None of these (reports) were disastrous, but they're not as strong as we like to see," said Brian Lazorishak, a portfolio manager at Chase Investment Counsel in Charlottesville, Virginia.

In other trading, the Nasdaq composite fell 23.89 points, or 0.8 per cent, to 3,007.56. Tech stocks could be in for some gains Friday following a strong earnings report after the closing bell Thursday from Microsoft. The software maker was up 2.8 per cent in post-market trading after reporting a rise in sales of its Windows operating system.

Thursday's slide began from the start of trading. Investors were on edge after stocks fell a day earlier on worries that Spain could have trouble paying down its government debt. Adding to the jitters, the Bank of Spain had reported that bad loans at the country's banks had hit an 18-year high.

Before the opening bell Thursday, investors were nervously watching a sale of new government bonds from Spain. The auction met with high demand, and more bonds were sold than expected, but yields rose anyway.

The yield on Spanish 10-year notes rose to 5.87 per cent, an increase of 0.06 percentage point.

European markets mostly fell. Spain's IBEX index fell 2.4 per cent, Greece's main index 1.8 per cent and France's CAC-40 fell two per cent.

- AP