Bank Rule Fears Curb Stocks
DONNA KARDOS YESALAVICH
Stock weakened Thursday morning as quarterly earnings from a number of companies, including Goldman Sachs, blew past analysts' estimates, but worries rose about possible restrictions on banks.
The Dow Jones Industrial Average dropped 124 points, or 0.1.2%, to 10477 in recent action. Boeing was the measure's best performer, up 1.1%. Cisco Systems was also strong, up 0.5%. Meanwhile, J.P. Morgan fell 3%.
The technology-heavy Nasdaq Composite fell 0.8%. The Standard & Poor's 500 index shed 1%.
Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs
Thursday, a slew of earnings reports came in above analysts' estimates. Among them, Goldman Sachs reported a fourth-quarter profit that well outstripped analysts' earnings expectations. Its shares slipped 2.3% recently.
However, President Barack Obama is expected to propose new limits Thursday on the size and risk taken by the country's biggest banks, marking the administration's latest assault on Wall Street. The measures Mr. Obama is expected to endorse include restrictions on the proprietary trading done by commercial banks, essentially limiting the way banks bet with their own capital.
Also weighing on sentiment Thursday, the Labor Department reported an unexpected rise in weekly jobless claims, although it said the increase was partly due to an administrative backlog in processing claims.
In addition, after a possible cutback in lending by Chinese banks had pressured U.S. stocks Wednesday, data Thursday showed China's economy expanded 10.7% in the fourth quarter, slightly ahead of expectations, fueling worries over further tightening measures.
Among stocks in focus, Xerox beat forecasts with earnings of 20 cents a share for the fourth quarter and set a slightly higher-than-expected full-year view. Its shares rose 5.1%. Meanwhile, eBay's shares jumped 8.1% following its release of better-than-expected quarterly earnings.
In other markets, crude-oil futures edged up ahead of the government's weekly inventory report. Meanwhile, gold futures slipped. The dollar strengthened against both the yen and the euro, while Treasurys edged lower. The 10-year note was off 2/32 to yield 3.661%.
In other economic reports, the Conference Board said the index of leading economic indicators increased 1.1% in December, as the economy gained strength at the end of 2009. Economists surveyed by Dow Jones Newswires had expected an increase of 0.7%.
Meanwhile, the Philadelphia Federal Reserve Bank said its January business index slipped to 15.2 versus 20.4 in December.
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