Losses End S& P's 6-Week Win Streak
U.S. stocks fell last week, ending a six-week winning streak for the Standard & Poor's 500-stock index, as concern grew that credit losses at banks are worsening and drugmakers slid following disappointing earnings at Merck.
The S&P climbed 1.7 percent Friday on earnings from Ford, American Express and Microsoft that met or beat analysts' expectations. Bank of America, the biggest U.S. bank by assets, sank 14 percent last week as bad loans increased, while Morgan Stanley tumbled 12 percent as its first-quarter loss was wider than analyst estimates. Merck sank 9 percent as it reported a 57 percent decrease in earnings.
"The financials are setting a big tone for the market," said Marc Harris, co-head of global research at RBC Capital Markets in New York. "We still have huge problems ahead."
Profits slid 29 percent on average for the 201 companies in the S&P index that reported first-quarter results. The period is poised to be the seventh straight quarter of declining earnings, the longest stretch since at least the Great Depression.
The S&P 500 slid 0.4 percent last week, to 866.23. The Dow Jones industrial average retreated 55.04 points, or 0.7 percent, to 8076.29. The Nasdaq composite index climbed 1.3 percent as Apple and eBay posted quarterly results that exceeded forecasts.
The Federal Reserve released the methods it used to conduct stress tests of the 19 largest American lenders.
Regulators accounted for banks incorporating $900 billion of off-balance sheet assets next year, and put a focus on common stock as a key component of capital.
The Treasury will auction $29 billion of three-month bills and $28 billion of six-month bills tomorrow. They yielded 0.11 percent and 0.28 percent, respectively, in when-issued trading. The Treasury will sell one-month bills the next day.
-- Bloomberg News