- Bank of America, Citigroup report worse-than-expected quarterly results
- Treasury to receive second part of TARP funds
- Intel reports in-line quarterly results
- December CPI decline softens from prior reading and drops less than expected; core CPI flat again
After trimming its losses the stock market is oscillating along the neutral line. Financials, however, continue to trade with marked weakness.
Financial stocks are currently down 3.2% with concerted weakness in diversified financial services companies (-9.8%). Insurers are limiting losses in the sector, though. Property and casulty insurers (+2.3%) and multiline insurers (+2.4%) are showing solid gains.
The financial sector remains the only sector in the red.
Exelon (EXC 54.00, +0.96) is providing the most support to utilities. The stock is up nearly 2% this session, but is down nearly 3% for the month.
Bank of America reported it lost $0.48 per share during the fourth quarter. The consensus had called for a profit of $0.08 per share. The need to conserve capital prompted Bank of America to slash its quarterly dividend to just one penny from $0.32 per share. Shares of BAC are now trading at their lowest point in more than 15 years.
Bank of America also secured $20 billion from the U.S. government to assist in the Merrill Lynch acquisition. The agreement gives the government a preferred stake and comes with a loss sharing agreement.
Citigroup (C 3.75, -0.08) also reported dismal numbers. The firm generated a loss of $1.72 per share. The consensus estimate called for a loss of $0.41 per share. Citigroup is reorganizing itself into two operating units, and also disclosed certain agreements regarding a loss sharing program, which was previously announced in November.
With many financial firms still in need of capital, the U.S. Senate has voted to release the second part of the Troubled Asset Relief Program (TARP). That makes another $350 billion available to the Treasury.
A CNBC Europe report indicated the British government is discussing a second round of recapitalizations, which has put pressure on Barclays (BCS 6.15, -2.25). Since Barclays didn’t take part in the first round, there is concern it will now be involved.
Tech giant Intel (INTC 13.41, +0.12) joined the earnings parade by reporting a profit of $0.04 per share. The results weren’t too surprising since the company clued investors in last week by issuing a revenue warning. Still, Intel garnered interest by indicating its gross margins will go up a bit by the second half of the year.
Genentech (DNA 84.39, -0.69) posted fourth quarter earnings of $0.95 per share, which was one penny short of the consensus estimate. The company also issued downside guidance. Genentech opted to not discuss the Roche proposal during its conference call.
Oil slipped towards $35 a barrel on Friday after the International Energy Agency cut its forecast for world oil demand this year sharply and two of the biggest US banks reported massive losses.
——————————————
DStreetDirect