Stocks Slide as Earnings, Sentiment Disappoint
Stocks skidded Friday as a drop in consumer sentiment exacerbated losses triggered by a disappointing round of earnings from American Express, Amazon and Microsoft.
The Dow lost about half a percent but held above the 9,000 mark after finishing above 9,000for the first time since January on Thursday. And the Nasdaq logged its 12th straight gain, its longest run since 1992.
Treasury Secretary Timothy Geithner told Senate lawmakers that he's willing to work with them on overhauling financial regulations but insisted that major changes are necessary.
Speaking at the Senate's risk-regulation hearing, Geithner said the financial system "failed in its most basic responsibility" to supply credit and protect consumers and that cannot happen again.
Later today, Fed Chairman Ben Bernanke and FDIC Chairman Sheila Bair will testify at the hearing.
In economic news, the Reuters/University of Michigan gauge of consumer sentiment dropped to 66in a final July reading from 64.6 in a mid-July reading and 70.8 at the end of June. Economists had expected the reading to tick up to 65. Measures of expectations for the future and current conditions also declined.
Microsoft shares tumbled 10 percent after the software giant reported a sharp drop in revenue.
Dow component American Express beat earnings forecasts but shares skidded as revenue missed estimates.
Amazon.com also beat but came under pressure as well as other aspects of its quarterly report disappointed investors. Its stock was down more than 7 percent.
On the plus side, energy-exploration company Schlumberger reported earnings of 68 cents a share that, though representing a 57 percent annualized drop, beat expectations.
We'll get a breather on the earnings front today — no after-the-bell reports are due.
CIT Group was still on its rollercoaster ride, with shares soaring nearly 20 percent after the lender amended a debt restructuring to lure more creditors and intends to keep its restructuring out of the courts. The stock had skidded more than 15 percent on Thursday following buzz that CIT may wind up in bankruptcy protection if it can't attract enough creditors.
Pharmaceuticals were one of the day's few bright spots, with Merck , Johnson & Johnson and Pfizer among the top gainers on the Dow.
— Peter Schacknow contributed to this report.