Significant weakness remains visible on Wall Street in early afternoon trading on Monday, as traders react negatively to the latest earnings news. While individual stocks have moved sharply higher on some notable merger announcements, the news has not benefited the broader markets.

On the earnings front, Bank of America (BAC) released its first-quarter results before the market open. While the company posted a better earnings figure than analysts had expected, a significant increase in loan loss protection made investors wary of holding onto the stock.

After paying preferred dividends, Bank of America earned $0.44 per share, up from $0.23 per share a year ago and well above analyst estimates of $0.04 per share. At the same time, the company also took a substantial $13.4 billion provision for loan losses.

Some additional selling pressure was generated by a report from the Conference Board showing that its leading economic indicators index fell by a little more than economists had been anticipating in March.

The Conference Board said its leading economic index fell 0.3 percent in March following a revised 0.2 percent decrease in February. The agency noted that the index has not risen in the past nine months.

Meanwhile, shares of Sun Microsystems (JAVA) have moved sharply higher after the server and software maker agreed to be acquired by Oracle (ORCL) for $9.50 per share in cash. The offer represents a 42 percent premium to Sun's closing price on Friday.

Oracle expects the acquisition to be accretive to its earnings by at least $0.15 per share on a non-GAAP basis in the first full year after closing.

Pepsi Bottling Group (PBG) and PepsiAmericas (PAS) are also showing strong upward moves after PepsiCo (PEP) offered to acquire both bottlers for about $6 billion.

The major averages have moved roughly sideways in recent trading, lingering near their worst levels of the day. The Dow is currently down 226.28 at 7,905.05, the Nasdaq is down 57.95 at 1,615.12 and the S&P 500 is down 29.62 at 839.98.

Sector News

While banking stocks are continuing to lead the broader markets lower, significant weakness is also being shown by steel stocks. The Amex Steel Index is down 8.3 percent on the day, pulling back well off the more than five-month closing high that it set in the previous session.

Airline stocks are also continuing to see substantial weakness, driving the Amex Airline Index down 6.5 percent. AMR Corp. (AMR), US Airways (LCC), and UAL Corp. (UAUA) are turning in some of the sector's worst performances.

Real estate, housing, and oil services stocks are also under considerable selling pressure, with the Morgan Stanley REIT Index down 7.3 percent, while the Philadelphia Housing Index and the Philadelphia Oil Services Index are down 6.9 percent and 6.2 percent, respectively.

Most of the other major sectors have also shown notable declines over the course of the trading day, with networking, healthcare provider, and semiconductor stocks posting notable losses.

Meanwhile, gold stocks remain some of the only advancing stocks of the session. The Amex Gold Bugs Index is up 5.3 percent as traders continue to react to an increase in the price of gold.

Stocks In The News

Eaton Corp. (ETN) is suffering a loss of 10.2 percent on the day after the company cut its full-year outlook. With the decline, the stock has plunged from the over two-month closing high it set on Friday.

For the full year 2009, the company lowered net income per share guidance to $2.10 - $2.60 and cut its operating earnings per share forecast to $2.50 - $3.00.

Additionally, Hasbro, Inc. (HAS) is down 3.5 percent after the company reported a decline in first-quarter earnings and missed revenue estimates.

Meanwhile, Providence Service Corp. (PRSC) is posting an 8.9 percent gain after the company raised its first quarter outlook. The company announced that it currently expects to report first quarter earnings of at least $0.35 per share on revenue of between $180 million and $185 million.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region closed mostly higher on Monday, with Chinese stocks showing notable strength due in part to the Chinese premier's upbeat assessment that the economy is doing better than expected.

Meanwhile, the major European markets remain stuck well below the unchanged line. The U.K.'s FTSE 100 Index is down 2.5 percent, while the French CAC 40 Index and the German DAX Index are posting losses of 4 percent and 4.1 percent, respectively.

In the bond market, treasuries have moved sharply higher amid the weakness among stocks, driving the yield on the benchmark 10-year note down 9.0 basis points to 2.84 percent.

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