Goldman deflates hopes for strong bank earnings

Dow Jones:11,825.29 (–12.64) S&P 500:1,281.92 (–13.10) Nasdaq:2,725.36 (–40.49)

US STOCKS fell as the SP 500 had the biggest drop since November after Goldman Sachs reported profit that failed to exceed analysts’ estimates and housing starts slid more than forecast.

Goldman Sachs slumped 4.7 per cent after earnings tumbled 52 per cent because of lower revenue from trading and investment banking.

American Expressfell the most in almost a month, declining 2.4 per cent following a lower-than-estimated profit forecast.

However International Business Machines (IBN)rallied 3.4 per cent to $155.69 after earnings topped projections.

The S&P500 slumped 1 per cent to 1,281.92 in New York. The Dow Jones Industrial Average declined 12.64 to 11,825.29.

“You’d better buckle up,” said Stanley Nabi, New York-based vice-chairman of Silvercrest Asset Management Group which oversees $9.5 billion. “Comparisons at both economic and earnings reports are not going to be that easy this year. That doesn’t mean things are getting worse. However, investors will need to get ready for more conservative readings.”

Goldman Sachs slumped 4.7 per cent to $166.49. Fourth-quarter net income decreased to $2.39 billion, or $3.79 a share, from $4.95 billion, or $8.20, a year earlier.

An index of homebuilders in S&P indexes slid 2.9 per cent. D.R. Horton, the second largest US homebuilder by revenue, dropped 3.7 per cent to $12.84. Lennar, the third largest US homebuilder, slid 3.4 per cent to $19.79.

American Express fell 2.4 per cent to $45.24. The biggest credit-card issuer by purchases said fourth-quarter net income would be less than some estimated.

US Steeldecreased 5.9 per cent to $52.33. The firm was downgraded to "hold" from "buy" at Deutsche Bank.

The PHLX semiconductor index dropped 2.4 per cent, its worst percentage decline since August 30th.

Rubicon Technologyslumped 7.7 per cent to $$20.75, and circuit-maker Linear Technology fell 4.4 per cent to $34.56.

Applefell 0.5 per cent to $338.84 after earlier rising as much as 2.3 per cent to $348.60. Net income in the fiscal first-quarter rose to $6 billion, or $6.43 a share, from $3.38 billion, or $3.67, a year earlier. – (Bloomberg)