Stocks open lower after latest earnings reports

By
Stephen Bernard, AP Business Writer
July 17, 2009, 10:38 AM ET
2 min read

NEW YORK -- Stocks are slipping in early trading as investors receive more mixed signals on the economy from earnings reports.

Bank of America BAC and Citigroup C became the latest banks to report big second-quarter profits, but both are showing weakness in their loan portfolios. General Electric GE beat earnings forecasts but revenue came up short.

Investors have been keenly focused on earnings reports this week, hoping to find more concrete signs of life in the economy. Going in to Friday's session, major market indicators are up about 7% for the week.

GoogleGOOG also reported mixed results after the market closed Thursday. The Internet giant said its second-quarter profit was its biggest since it went public five years ago. However, investors were concerned that revenue growth continued to decelerate. It was Google's second straight quarter of single-digit revenue growth.

IBMIBM reported revenue below expectations, but its profit continued to improve. The computer and technology firm's second-quarter results were strong enough that it increased its full-year earnings forecast.

During the recession companies have aggressively been slashing expenses to maintain profitability through the downturn. Many have been successful at beating analysts' earnings expectations as their cost-cutting measures have thus far outpaced the slowdown in sales and revenue.

Aside from the onslaught of earnings reports, investors received a reading on housing starts Thursday. The Commerce Department reported construction of new homes and apartments rose 3.6% in June to a seasonally adjusted annual rate of 582,000 units.

Building permits, seen as a good indicator of future activity, rose 8.7% to an annual rate of 563,000 units in June.

Stocks rallied again Thursday after a strong earnings report from JPMorgan Chase JPM and as investors pushed into technology stocks ahead of IBM and Google's results. The tech-heavy Nasdaq advanced for the seventh straight day, rising 1.2%, and closed at its highest level since October. The Dow jumped 1.1%.

Meanwhile, bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.56% from 3.58% late Thursday. The yield on the three-month T-bill, considered one of the safest investments, rose to 0.17% from 0.16% late Thursday.

The dollar rose against other major currencies, while gold prices also rose.

Overseas, Japan's Nikkei stock average rose 0.6%. In afternoon trading, Britain's FTSE 100 gained 0.8%, Germany's DAX index rose 0.8%, and France's CAC-40 gained 0.8%.