Stocks fall as earnings from blue chips disappoint
Published: Tuesday, January 25, 2011 at 3:08 p.m.
Last Modified: Tuesday, January 25, 2011 at 3:08 p.m.
NEW YORK — Weak earnings from major U.S. companies and another drop in home prices drove stocks down on Tuesday.
Four of the 30 companies in the Dow Jones industrial average reported results before the market opened: DuPont, 3M Co., Verizon Communications Inc. and Johnson & Johnson.
3M lost 2.6 percent after the manufacturing company's income fell because of higher costs.
Johnson & Johnson lost 1.8 percent after reporting a 12 percent drop in income. The maker of Tylenol and other drugs was hammered by costly recalls of its products.
DuPont's income fell but still beat expectations. Its stock rose 0.2 percent. Verizon's stock rose 1.6 percent after the phone company's profits surged. Verizon will start selling Apple Inc.'s iPhone next month.
Another Dow member, American Express Co., fell 3.4 percent after reporting earnings late Monday that came in below analysts' expectations.
The Dow is down 48 points, or 0.4 percent, to 11,933 in early afternoon trading.
The Standard & Poor's 500 index slipped 5 points, or 0.4 percent, to 1,286. The Nasdaq composite fell 9, or 0.3 percent, to 2,708.
Falling home prices helped push stocks lower. Prices fell in 19 out of the 20 cities tracked by the Standard and Poor's / Case-Schiller home price index in November.
Doug Roberts, chief investment strategist for Channel Capital Research.com, said that investors are looking ahead to President Barack Obama's State of the Union speech Tuesday night and a Federal Reserve meeting that concludes Wednesday. The Fed's $600 billion bond-buying plan, launched in November, was partially aimed at boosting stock prices. The S&P 500 has gained 8.5 percent in the last three months.
"As long as the Fed keeps pumping money into the economy," Roberts said, "stocks will probably keep going up."
Government spending and the public deficit are expected to be key topics in President Obama's address.
The yield on the 10-year Treasury note fell to 3.33 percent from 3.39 percent late Monday. Bond yields move in the opposite direction of their prices.