Investors cautious after banks stumble
NEW YORK » Wall Street had a mixed performance yesterday as investors regained a cautious stance after disappointing news from Bank of America Corp. and Midwest bank National City Corp., and after another record-breaking tear in oil prices.
Investors were clearly uneasy about extending last week's big gains after Bank of America said its first-quarter earnings fell 77 percent on write-downs and widening credit losses. The stock fell 95 cents, or 2.5 percent, to $37.61.
Shares of National City dropped after the Midwest bank said it got a $7 billion cash infusion from equity investors, lowered its dividend and posted a $171 million loss for the first quarter. National City shares tumbled $2.30, or nearly 28 percent, to $6.03.
Still, the market performed relatively well yesterday, climbing back from an early plunge. Part of the reason was that not all the earnings yesterday were downbeat. Merck & Co. said its profit nearly doubled in the first quarter because of a $1.4 billion distribution from a partner drug company and a slight rise in sales.
Merck fell 13 cents to $39.63 after reporting its quarterly results, while Eli Lilly and Co. fell $2.48, or 4.8 percent, to $49.59 after reporting that strong sales for Cymbalta and Cialis helped double the drug maker's first-quarter earnings but could not lift them up to Wall Street's expectations.
With little in the way of economic data scheduled to arrive this week, investors are looking at a big flow of corporate reports for insights into the well-being of the economy. At this point, investors remain cautious, but because they have already taken huge amounts of money out of stocks, the market appears stuck in a range -- fluctuating back and forth as traders recoil at disappointing news but then take advantage of bargain prices.
"The percentage of cash on the sidelines as a percentage of market value is the highest it's ever been," said Richard E. Cripps, chief market strategist for Stifel Nicolaus. "We have an acute level of risk aversion by investors -- understandably so."
The Dow Jones industrial average fell 24.34, or 0.19 percent, to 12,825.02, after dropping 98 points in early trading.
Broader stock indicators closed mixed. The Standard & Poor's 500 index fell 2.16, or 0.16 percent, to 1,388.17, while the Nasdaq composite index rose 5.07, or 0.21 percent, to 2,408.04. The Russell 2000 index of smaller companies fell 3.07, or 0.43 percent, to 718.00.
The technology-dominated Nasdaq got a boost from Apple Inc., which rose $7.12, or 4.4 percent, to $168.16 after an RBC Capital Markets analyst lifted his price target for the stock and predicted the company's fiscal second-quarter results will surpass expectations.
Rising oil prices, meanwhile, weighed on some stocks, including airlines, but boosted energy companies. Crude rose 79 cents to close at a record $117.48 a barrel, on supply worries and speculative buying.
On the New York Stock Exchange, declining issues outnumbered advancers by about 9 to 7. Consolidated volume came to a very light 3.03 billion shares, down from 4.12 billion shares on Friday; volume was the lowest since Jan. 3, with many traders taking the day off for the Passover holiday.
Bond prices dipped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.73 percent from 3.70 percent late Friday. Gold also rose, while the dollar was mixed against other major currencies.