By Donna Kardos Yesalavich
U.S. stocks slipped Thursday as disappointing earnings and
uncertainty over the final shape of the financial-overhaul bill
weighed on the market.
The Dow Jones Industrial Average (DJI) was down 87 points, or
0.9%, to 10,211, in recent trading.
Financials led the blue-chip measure's decline, as J.P. Morgan
Chase (JPM) dropped 2.7% and Bank of America (BAC) fell 2.1%.
In Washington, House and Senate lawmakers sought to reach
agreement on the final pieces of legislation that is expected to
tighten oversight of the financial industry more than many had
expected.
The lawmakers agreed on new capital requirements that will give
large banks five years to stop treating trust-preferred securities
as Tier 1 capital, a key measure of a bank's strength. However,
Senate negotiators planned to reject a House provision that could
force big banks to pay for winding down mortgage finance giants
Fannie Mae and Freddie Mac.
Investors compared the bill's tortured journey through Congress
to the record-long Wimbledon tennis match that concluded on
Thursday.
"It's long and drawn-out and everybody's going to be exhausted
when it's over, but at least you'll know who the winners and losers
will be," said Jordan Smyth, managing director at Edgemoor
Investment Advisors.
Within the Dow, shares of Home Depot (HD) also traded weak,
slipping 2.3%, as did Pfizer (PFE), down 2.4% after the drug maker
said it would suspend osteoarthritis trials of its pain drug
tanezumab.
The Nasdaq Composite (RIXF) declined 1.1% to 2,230. The Standard
& Poor's 500-stock index (SPX) slipped 1.1% to 1,080.
In the consumer-discretionary sector, Nike (NKE) declined 3.9%.
Late Wednesday, the athletic-shoe and apparel maker's revenue
growth missed analysts' expectations.
Bed Bath & Beyond (BBBY) dropped 3.8% after its
current-quarter earnings outlook fell below analysts'
estimates.
Darden Restaurants (DRI), owner of the Olive Garden and Red
Lobster chains, fell 5.3% after reporting earnings fell 6% for the
fourth quarter of fiscal 2010.
The results helped pull other consumer-discretionary stocks
lower, especially retailers: J.C. Penney (JCP) dropped 5.7%, Macy's
(M) skidded 5% and Nordstrom (JWN) sank 3.5%.
U.S. economic data were mixed. Weekly jobless claims fell more
than expected, and there was a smaller-than-expected drop in
durable-goods orders.
However, manufacturing activity in the Federal Reserve Bank of
Kansas City's district slowed in June. Producers grew more cautious
about the future and employment turned negative again, according to
the report.
The manufacturing data added to investors' worries a day after
the Federal Reserve's policy-making body kept its key interest rate
near zero, as expected, but cast its policy statement with more
downbeat language.
The euro strengthened to $1.2376 recently, reversing earlier
declines. The U.S. Dollar Index (DXY), which measures the greenback
against a basket of six others, fell 0.3%.
Treasurys rose, pushing the yield on the 10-year note down to
3.10%, while crude-oil futures edged down but gold futures
advanced.
Among other stocks in focus, Lennar (LEN) dropped 0.6%. The home
builder swung to a fiscal second-quarter profit, beating analysts'
estimates.
Hasbro (HAS) shares rose 3.6% after confirming it had been
approached by a private-equity firm about a buyout, but the toy
maker's board determined it wasn't interested in pursuing the
transaction. Private-equity firm Providence Equity Partners had
approached the toymaker to take the company private in a leveraged
buyout, people familiar with the matter said.