Financial stocks led the market lower yesterday, with the Dow suffering its worst day in seven weeks. Lower commodity prices sent energy stocks lower while concern that credit losses are worsening for banks hit the financial sector.
The Dow Jones slumped 289.60 points to close at 7,841.73 while the S&P 500 dropped 37.21 points to end at 832.39. The Nasdaq tumbled 64.86 points to finish at 1,608.21.
Bank of America beat expectations with a first quarter profit of $4.2 billion. However, the full earnings report raised concerns over the sustainability of the company's results after it said its credit quality deteriorated markedly. Shares in the bank sank 24.3% as a result, while the KBW Bank index lost 15.4%.
In deal news, Oracle Corp said it would buy Sun Microsystems in a deal worth $7.4 billion, or $9.50 per share. The deal follows a $7 billion buy out offer from IBM earlier this month.
IBM reported results after the close. The company announced a bigger than expected fall in quarterly sales, but earnings still topped estimates. Shares fell 1% in extended trading. Also in the tech sector, Texas Instruments reported weaker sales, but earnings that topped estimates. Shares jumped 3% after the closing bell.
US light crude oil for May delivery plummeted $4.45 to $45.88 a barrel.
COMEX gold for June delivery gained $19.60 to settle at $887.50 an ounce.
Treasury prices jumped, lowering the yield on the 10 year note to 2.84% from 2.94%.
The Nikkei slid 213.42 points to close at 8,711.33 this morning. Toyota Motor Corp fell 3.9% after the Yomiuri newspaper said the car makers domestic output may fall. Sony, which gets quarter of its sales from the US retreated 4.1% after Nikko Citigroup cut its rating and the yen strengthened.
The Hang Seng dropped 466.88 points to 15,284.03 this morning on weaker earnings and lower commodity prices. China Mobile, the world's biggest wireless carrier, fell 5.1% after first quarter profit missed estimates. HSBC declined 5.5% after deteriorating credit quality at Bank of America raised concerns for more bank write downs.
The FTSE 100 is currently 12.05 points higher at 4,002.91. Associated British Foods tops the risers board, climbing 5.7%, after posting better than expected results. Tesco follows after posting solid FY results, the retailer is currently 4.8% higher. Xstrata falls 1% after copper and zinc prices tumbled in Shanghai. Banks suffer following on from Bank of Americas results. RBS loses 3.7%, Lloyds is off 2.2% and Barclays falls 1.7%. Prudential drops 3.8% after Morgan Stanley downgraded the stock to Underweight from Equalweight.