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Stocks Plummet on Disappointing Earnings Reports

Strategic Insights

— 2 min read

Wall Street experienced a decline on October 16, 2009, as major companies including General Electric and Bank of America reported weaker-than-expected earnings. The unexpected downturn marked the end of a week that saw the Dow Jones Industrial Average (DJIA) push above 10,000 for the first time in a year. Crude oil prices fell, and gold also dropped for a third consecutive session, with investors shifting focus from metals to earnings reports. Despite the decline, a significant increase in industrial production was reported, with a 0.7% rise in September output, exceeding the expected 0.4% gain.

Key Takeaways:

  • General Electric (GE) reported Q3 EPS of $0.22 per share, below expectations of $0.20 per share, with revenues of $37.8 billion, below forecasts of $39.5 billion.
  • Bank of America (BAC) reported a Q3 loss of $0.26, exceeding the predicted loss of $0.21, with revenue net of interest rising 32% to $26.4 billion, below the Street estimate of $27.6 billion.
  • AMD reported a loss smaller than the Street view, while IBM reported a revenue decline, and Google was upgraded to "buy" with a price target increase to $625 from $500.
  • Goldman Sachs, Bank of America/Merrill, UBS, and JP Morgan all raised their price targets for Google above $600 a share.
  • The 0.7% rise in September industrial production exceeded the predicted 0.4% gain, with capacity utilization rising to 70.5% from a revised 69.9% in August.
  • The Dow Jones Industrial Average (DJIA) pushed above 10,000 for the first time in a year before the unexpected downturn on October 16, 2009.
  • Google (GOOG) reported Q3 revenue of $4.38 billion, exceeding the analyst mean of $4.24 billion, with non-GAAP EPS of $5.89 per share, ahead of Street estimates of $5.42 per share.
  • AMD experienced an uptrend as of Monday, October 12, 2009, indicated by an automated pattern recognition system, the Comtex SmarTrend Alert.
  • Bank of America (BAC) also experienced an uptrend, as of Monday, October 12, 2009, indicated by an automated pattern recognition system, the Comtex SmarTrend Alert.
  • General Electric (GE) experienced an uptrend, as of Monday, August 3, 2009, indicated by an automated pattern recognition system, the Comtex SmarTrend Alert.

Statistics:

  • The Dow Jones Industrial Average (DJIA) pushed above 10,000 for the first time in a year before the unexpected downturn on October 16, 2009.
  • The 0.7% rise in September industrial production exceeded the predicted 0.4% gain.
  • Capacity utilization rose to 70.5% from a revised 69.9% in August.
  • Google (GOOG) reported Q3 revenue of $4.38 billion, exceeding the analyst mean of $4.24 billion.
  • General Electric (GE) reported Q3 EPS of $0.22 per share.
  • Bank of America (BAC) reported a Q3 loss of $0.26.
  • AMD's price was $4.43 on August 28, 2009, as indicated by the Comtex SmarTrend Alert.
  • BAC's price was $4.50 on March 10, 2009, as indicated by the Comtex SmarTrend Alert.
  • GE's price was $13.65 on August 3, 2009, as indicated by the Comtex SmarTrend Alert.

Sources:

  • MidnightTrader (Boston, Oct 16, 2009)
  • MarketWatch.com
  • Comtex SmarTrend Alert
  • Thomson Reuters
  • Copyright (C) 2009 MidnightTrader.com. All rights reserved.

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