Dow Comes Off of High; BofA and GE Earnings Sideline Investors – October 16, 2009

Stocks Close Lower

The cheers on Wall Street subsided on Friday as investors pushed stocks lower following disappointing earnings from Bank of America (BAC) and General Electric (GE). A dip in consumer sentiment also reminded investors that people are still struggling and not that confident in the economy just yet. The Dow Jones Industrial Average came off of its 10,000 high and finished the week off at 9,995.91. Broader stock indicators also finished in negative territory. The Standard and Poor’s 500 lost 8.88 points while the Nasdaq shed 16.49 points. Two stocks fell for every one that rose on the New York Stock Exchange, where volume came to 969 million shares. Bond prices mostly rose, pushing yields lower. The yield on the benchmark 10-year Treasury note fell to 3.43 percent from 3.46 percent late. The dollar was mixed against other major currencies, while gold prices slipped. Looking ahead, investors will be flooded with another round of earnings next week, so expect those to be the driving force of the market.

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Sliding oil prices are taking a toll on quarterly earnings at some of these big oil companies. That is definitely ringing true at Halliburton (HAL). The company said that third quarter profits plunged 61% from last year, but still beat analyst expectations. Despite the big decline in profits, the industry giant sees signs of a recovery in oil patch.

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Shares of Advanced Micro Systems (AMD) didn’t take the same upwards path as shares of Intel (INTC) even after posting a narrower-than-expected loss. Investors were more concerned about the company’s fourth quarter guidance, which showed some areas of concern.

Consumer sentiment unexpectedly fell this month. Not surprising since the jobs market is still lagging behind the recent turnaround in the economy. There are still a ton of people that are currently unemployed. On the other hand, production in the United States went the opposite direction. Output of U.S. factories, mines and utilities rose 0.7% in September. This increase was more than triple what analysts were expecting.

Google Inc.’s (GOOG) earnings and stock price are soaring again. The company reported record earnings late Thursday, with its biggest quarterly profit ever. Google is definitely reaping the benefits of a small turnaround in its online advertising business. Paid clicks grew 14% compared to the same period last year, and 4% compared to the prior period.

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US authorities have charged a billionaire hedge fund manager and five others with insider trading. Raj Rajaratnam and the other defendants are suspected of pocketing nearly $20 million after receiving inside information regarding Google (GOOG), AMD (AMD), and Hilton Hotels.

Once again, General Electric’s (GE) financial unit dragged on its earnings. Things could have been a lot worse for the company, but its energy division came through as always.

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