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U.S. stocks drop on GE, Bank of America, consumer data

Oct. 16 (Bloomberg) — U.S. stocks fell, pulling benchmark indexes down from a one-year high, as General Electric Co. and Bank of America Corp. reported disappointing results and a gauge of consumer confidence trailed economists’ estimates. The dollar rose for the first time in five days.

GE , the world’s biggest maker of jet engines, slumped 4.4 percent after reporting $1.9 billion less revenue than analysts forecast. Bank of America retreated 4.5 percent following its $1 billion loss. Google Inc. rose 3.1 percent as Chief Executive Officer Eric Schmidt said the worst of the recession has passed and the company is now more focused on acquisitions.

The Standard & Poor’s 500 Index slipped 1.2 percent to 1,083.47 at 10:03 a.m. in New York, trimming its second straight weekly advance to 1.1 percent. The Dow Jones Industrial Average fell 108.6 points, or 1.1 percent, to 9,954.34. The dollar strengthened 0.5 percent against the euro.

“The market is evaluating each bellwether as it comes through and showing its elation or disappointment,” said Philip Orlando , who helps oversee $400 billion as chief equity market strategist at Federated Investors Inc. in New York. “You had some blowout numbers yesterday, and the market moved up. Today, you had disappointing earnings from GE and Bank of America and the market responded accordingly.”

S&P 500 futures rose after the stock market closed yesterday following better-than-estimated earnings from Google. So far, 80.4 percent of companies in the index beat third- quarter earnings estimates. That compares with 72.3 percent during the entire April-through-June period, which matched the highest proportion in Bloomberg data going back to 1993.

Reversing Gains

Stocks turned lower today, erasing a 0.5 percent advance in S&P 500 futures, after the reports from GE and Bank of America. Equities extended declines after the Reuters/University of Michigan preliminary index of consumer sentiment decreased to 69.4 from 73.5 in September, which was the highest in more than a year. Measures of expectations for six months ahead and current conditions both fell.

GE slumped 4.4 percent to $16.05. Third-quarter profit declined 45 percent as the company scaled back real estate and consumer lending and sold fewer medical machines, leading to a steeper drop in sales than analysts projected. Revenue decreased 20 percent to $37.8 billion.

Bank of America slipped 4.5 percent to $17.28. The lender’s $1 billion third-quarter loss, or 26 cents per diluted share, compared with a profit of $1.18 billion, or 15 cents, a year earlier.

International Business Machines Corp. dropped 4.1 percent to $122.79. The world’s largest computer-services company said new contract signings declined last quarter, a sign that customers aren’t yet ready to increase spending as the economy begins to recover.

Missing Forecasts

Advanced Micro Devices Inc. fell 6 percent to $5.82 after the chipmaker predicted that sales will be “up modestly” in the fourth quarter, a forecast that fell short of some analysts’ estimates.

Google gained 3.1 percent to $546.21. The company reported profit and sales that beat analysts’ estimates after the recovering economy boosted demand for online ads and e-commerce.

The Dollar Index , which IntercontinentalExchange Inc. uses to track the currency against six major U.S. trading partners, rose from a 14-month low. The gauge added 0.4 percent to 75.764, rebounding from an almost 14-month low, after some investors bet that the currency’s four-day decline was overstated given signs of a U.S. economic recovery.

The yield on the 10-year Treasury fell 0.03 percentage point to 3.42 percent. The Federal Reserve said output at U.S. factories, mines and utilities in September rose more than three times as much as economists predicted. The 0.7 percent increase exceeded every forecast in a Bloomberg News survey and followed gains of 1.2 percent in August and 0.9 percent in July.

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