Stocks slip in early trading as revenues fall at Citigroup and Bank of America; Google slumps

Stocks sink as bank revenues, Google disappoint

NEW YORK — Stocks slumped Friday on earnings reports from two big banks disappointed investors and a survey showing that consumers are becoming more pessimistic.

The Dow Jones industrial average fell more than 180 points, while all the major market indexes suffered losses of about 2 percent. Interest rates fell in the Treasury market as investors once again sought out the safety of government securities.

The market fell at the opening after Citigroup Inc. and Bank of America Corp. released earnings. The two banks, like JPMorgan Chase & Co. a day earlier, reported higher earnings as losses from failed loans fell. But they are also seeing lower trading revenues because of the stock market’s plunge this spring.

Stocks fell further after a twice-monthly survey from the University of Michigan and Reuters found that consumers’ gloom is increasing. An index of consumer sentiment compiled from the survey fell to 66.5 in early July from 76. That was a bigger drop than expected.

“It’s mostly about the poor consumer confidence numbers,” said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. “The possibility of a double dip also starts to come to mind” for investors, he said, referring to a phrase that describes the economy falling back into recession.

Typically low summer volume Friday intensified the market’s losses, he said.

“We’re going to see more volatility, days when there are 2 percent swings,” Conroy said. “The economy is OK. But the one concerning part of it is jobs — that’s the reason why you have poor consumer confidence.”

Citigroup’s shares were off nearly 4 percent in early trading while Bank of America was off more than 6 percent. General Electric Co. fell 3 percent despite delivering stronger earnings and a healthy outlook before the market opened.

Stocks had struggled to a mixed finish Thursday after being down for much of the day on disappointing regional manufacturing reports for the Northeast. Much of the deficit was erased late in the day as news began to circulate that Goldman Sachs Group Inc. had settled civil fraud charges with the government over its dealings with subprime mortgage securities.

However, while investors were relieved that Goldman was putting the case behind it, they were again confronted Friday by larger ongoing worries: the economy and the future of the banking industry now that Congress has approved the banking industry overhaul bill.

The Dow Jones industrial average was down 184.97, or 1.8 percent, at 10,174.34. The Standard & Poor’s 500 index fell 21.47, or 2 percent, at 1,075.01. The Nasdaq composite index fell 46.47, or 2.1 percent, to 2,202.61

About six stocks fell for every one that rose on the New York Stock Exchange, where volume came to 447 shares.

Bond prices rose in what’s known as a flight to safety. That sent their yields lower. The yield on the benchmark 10-year Treasury note, which helps set interest rates on mortgages and other kinds of loans, fell to 2.95 percent from 3.00 percent late Thursday.

The formal announcement of Goldman’s $550 million settlement came after the stock market closed on Thursday. Goldman was the only major financial company to show a gain Friday. It was up $4.52, or 3.1 percent, at $149.74.

Bank of America’s stock fell 96 cents, or 6.2 percent, to $14.43. Citigroup was off 15 cents, or 3.6 percent, at $4.01. Both companies beat analysts’ expectations. However, the drop in their revenue as a result of the stock market’s slide had investors worried about how banks would make money in the future under new government regulations.

Google Inc. fell $27.88, or 5.6 percent, to $466.14 after its earnings fell short of analysts’ expectations.

GE lost 47 cents or 3.1 percent to $14.78.

The Dow ended a seven-day winning streak on Thursday. The Dow was down as much as 126 points early in the day, but closed down just 7 as word spread about the Goldman Sachs settlement.

A government report on consumer prices for June was mainly in line with anlayst expectations. The Consumer Price Index dipped 0.1 percent last month, largely due to lower energy bills.

The euro climbed above $1.29 as it recovers following a steep plunge earlier this year amid fears that government debt in many European nations would send the continent back into recession.

Overseas, Britain’s FTSE 100 fell 0.7 percent, Germany’s DAX index fell 1.6 percent, and France’s CAC-40 fell 2.1 percent. Japan’s Nikkei stock average tumbled 2.9 percent.

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Business Writer Dave Carpenter contributed to this report from Chicago.