US stocks drop on China interest rates, earnings’ reports

Tuesday, October 19, 2010

NEW YORK - US stocks fell sharply Tuesday amid mixed corporate earnings and as China raised interest rates for the first time since 2007.

China’s central bank, the People’s Bank of China, announced a rise in its benchmark interest rates by 0.25 percentage points. It said its one-year deposit rate would rise to 2.50 percent from Wednesday, while its one-year lending rate would rise to 5.56 percent.

After Monday’s close, Apple said it earned $4.31 billion in the quarter compared to $2.53 billion a year ago, but its shares fell by 2.7 percent Tuesday, causing a retreat in technology companies.

IBM posted a 12-percent increase in third-quarter profits after markets closed Monday, as revenue jumped in the company’s key growth markets of Brazil, Russia, India and China, but its stock was down 3.4 percent Tuesday.

US investment firm Goldman Sachs Group Inc Tuesday reported third-quarter net income of $1.9 billion, down 40 percent year-on-year but better than analysts’ forecasts.

The New York-based securities firm said that lower costs and higher investment banking revenue helped to offset an overall decline in trading.

The blue-chip Dow Jones Industrial Average fell 165.07 points, or 1.48 percent, to 10,978. The broader Standard and Poor’s 500 Index dropped 18.81 points, or 1.59 percent, to 1,165.90. The technology-heavy Nasdaq Composite Index shed 43.71 points, or 1.76 percent, to 2,436.95.

The US currency rose against the euro to 72.77 euro cents from 71.77 euro cents Monday. It increased against the Japanese currency to 81.61 yen from 81.21 yen.

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