Wall Street fell on Friday after disappointing quarterly results from Dow components General Electric Co
GE's weaker-than-expected revenue and Bank of America's loss showed U.S. businesses and consumers continue to struggle as the economy slowly recovers from the worst recession in decades. The results were a sharp contrast to JPMorgan Chase & Co
Bank of America's loss stemmed from consumer credit losses, and it blamed continued weakness in the U.S. and global economies and stress on the consumer. GE, although beating earnings estimates, reported lower-than-expected revenue as sales fell across all its diverse businesses.
The news was a setback for investors wowed by earlier corporate earnings and spurred profit-taking after a strong run that saw major indexes hit new yearly highs and pushed the Dow industrials above 10,000 on Wednesday.
I don't know if the bad news was a complete surprise from Bank of America, but it certainly underwhelmed poor expectations, said Jack Ablin, chief investment officer at Harris Bank in Chicago. A 20-percent decline in revenue on GE - that seemed like a big let down.
Ablin said the results showed we still have quite a lot of work to go to fix the economy.
The Dow Jones industrial average <.DJI> dropped 112.45 points, or 1.12 percent, to 9,950.49. The Standard & Poor's 500 Index <.SPX> fell 14.10 points, or 1.29 percent, to 1,082.46. The Nasdaq Composite Index <.IXIC> lost 27.92 points, or 1.28 percent, to 2,145.37.
Bank of America's shares fell 4.2 percent to $17.34, and GE dropped 4.8 percent to $15.99.
Adding to the gloom, U.S. consumer confidence fell unexpectedly this month on concerns over the state of personal finances. The news overshadowed an earlier report that showed surprisingly strong industrial production in September, which climbed for the third consecutive month.
Investors are having a logical debate right now, which is, what is the recovery going to look like and what is its effect on corporate profits? said Bruce Zaro, chief technical strategist at Delta Global Advisors in Boston.
The U.S. dollar, which has traded inversely to stocks, with equities rising as the greenback fell, rose, sparking profit-taking in currencies that earlier hit multi-month highs against the U.S. unit.
The dollar climbed 0.32 percent against a basket of currencies <.DXY>. That and demand concerns weighed on commodity prices, including oil, which sank back toward $77 per barrel after touching a one-year high on Thursday
(Additional reporting by Leah Schnurr; Editing by Padraic Cassidy)