April 15, 2008 in Business

Stocks dip on disappointing earnings

Associated Press The Spokesman-Review
 

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NEW YORK – Stocks finished a quiet session moderately lower Monday as investors grappled with concerns about the health of corporate profits after Wachovia Corp. posted disappointing quarterly results.

Investors paused following a sell-off Friday and ahead of a raft of quarterly results and economic data arriving this week.

Wachovia surprised investors by posting a first-quarter loss of $393 million and cutting its quarterly dividend by 41 percent to 37.5 cents. The bank, which analysts had expected to post a profit, also said it plans to raise $7 billion through a stock offering.

But investors appeared to find some encouragement in the session from a better-than-expected report on retail sales. The Commerce Department’s reading on March retail sales, which showed a modest 0.2 percent rise following February’s 0.6 percent decline, appeared to quell some unease about the economy. The March figure bested the flat reading analysts had predicted. Excluding a 1.1 percent rise at gasoline service stations, retail sales would have been flat last month – and possibly negative when adjusted for inflation.

“We obviously came out with more bad financial news,” said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research, referring to the Wachovia report. “The flip side is we had retail sales come in a little better than expected. It seems like they kind of negated each other.”

The Dow Jones industrial average fell 23.36, or 0.19 percent, to 12,302.06.

Detrick noted that the Wachovia news compounded investors’ concerns about the banking sector following a report Friday from General Electric Co. GE, seen as a bellwether of big business and the broader economy, said its financial services business was challenged in the first quarter by the slowing U.S. economy and difficult capital markets. The conglomerate’s disappointing first-quarter numbers sent the major indexes down by more than 2 percent Friday.

“This is just more bad news for financials. It just confirms that the financials are by no means out of the woods yet,” Detrick said of Wachovia.

Overseas, Japan’s Nikkei stock average fell 3.05 percent. Britain’s FTSE 100 closed down 1.08 percent, Germany’s DAX index fell 0.74 percent, and France’s CAC-40 fell 0.66 percent.


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