GE and B of A earnings drag the DOW down 120 points this morning

General Electric posted revenue that missed Wall Street's expectations this morning. Sales were down 20% across all the business channels, from trains to the NBC Universal media stations. GE also announced that orders, which indicate future sales, were also down.

While GE revenues beat expectations, profits were down 42%. Third-quarter profit fell 42 percent to $2.49 billion, or 23 cents per share, down from $4.31 billion, or 43 cents per share, a year earlier.

Bank of America posted a wider than expected quarterly loss. B of A, the nations’ largest bank posted a net loss of $1 billion, or 26 cents per share, for the third quarter, compared with net income of $1.18 billion, or 15 cents per share, in the same period last year. According to B of A spokesman, expenses grew at a faster rate than revenues during the third quarter.

Consumer loans and credit cards, which comprise 60% of B of A’s loan portfolio were the biggest drag on B of A’s revenues, while ironically, Merrill Lynch contributed $2.2 billion in profits.
"The adverse credit picture continues to weigh on the firm and there's really a poor earnings prospect until they can turn that around," said Gary Townsend, chief executive of investment firm Hill-Townsend Capital.

The DOW opened down approximate 100 points this morning based on these earnings reports. When two business giants such as GE and B of A report such dismal earnings, even amid better than expected earnings from other business giants, investors take a breather from the rush to invest. Other bank stocks are also down this morning, following these earnings reports. Many of those banks, most notably the smaller regional banks, will be reporting earnings next week.

Without some very positive surprises this morning, it looks likely that the markets could close down today to end the week.

Written by Shelby Bateson