Stocks fall for 3rd straight day on bank worries
NEW YORK — Stocks retreated Friday for the third straight day on fresh concerns about potential new banking and trading regulations.
The market is extending a decline that saw the Dow Jones industrial average post its biggest two-day drop since June.
Upbeat earnings from General Electric and McDonald’s failed to dispel the new worries.
President Barack Obama spooked the market Thursday after asking Congress for limits on how large big banks can be and to end some of the risky trading large financial companies have used in recent quarters to boost profits.
The market could be re-entering a period of uncertainty that defined the financial crisis and sent it sharply lower nearly a year ago before its 10-month rally.
In morning trading, the Dow Jones industrial average fell 32.34, or 0.3 percent, to 10,357.54. The Standard & Poor’s 500 index fell 3.16, or 0.3 percent, to 1,113.32, while the Nasdaq composite index declined 6.94, or 0.3 percent, to 2,258.76.
The Dow lost 213 points Thursday and has given up 336 points, or 3.1 percent, during the past two trading sessions. The losses have erased all the early gains seen in 2010.
Overseas, Asian markets overnight followed the U.S. sharply lower. European markets are also falling.
General Electric Co. reported fourth-quarter profit that beat analyst expectations. The conglomerate also said it is seeing an increase in orders and a growing backlog for products and services, signs that the economy is starting to improve.
Fast-food chain McDonald’s Corp. reported its sales and profit grew in the fourth quarter as its cheap fare drew in more customers looking for a deal.
In recent months, the Dow industrials would almost certainly be higher after two components of the index reported positive quarterly results. The market’s 10-month rally have been fueled by growing signs of economic improvement such as better-than-expected quarterly earnings.
Internet giant Google Inc. also provided an upbeat sign for the economy, posting robust fourth-quarter earnings that easily topped analyst estimates. The results were driven by a pickup in Internet advertising, which could be a sign companies are feeling more confident the economy will recovery and opting to spend more to draw in customers.
However, Google shares fell in morning trading as its revenue growth only matched expectations.
Credit card lender American Express Co. also beat expectations after it set aside less money for defaulting loans. Default and delinquency rates both fell from the previous quarter, another encouraging sign for the economy.
High loan losses have plagued the financial sector and any declines in defaults would be a welcome sign that the consumer is starting to recover.
Large financial firms, including JPMorgan Chase & Co., Citigroup Inc. and Bank of America Corp. all plummeted Thursday. The three big banks, which have prominent consumer and investment banking operations, would likely be the hardest hit by Obama’s new regulations. Shares of each all declined more than 5 percent.
Citigroup and JPMorgan were both modestly higher Friday, while shares of Bank of America declined.
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