Stocks slip after Goldman, Citi earnings

NEW YORK — Investors turned cautious Thursday after earnings reports from Goldman Sachs Group Inc. and Citigroup Inc. stirred worries about the troubles banks still face.

Stocks slipped, at times sending the Dow Jones industrials back below 10,000. The Dow had breached that level the day before for the first time in a year, helped by strong earnings from JPMorgan Chase & Co. and Intel Corp.

JPMorgan helped set a high bar for bank earnings, and investors didn’t like what they heard as much on Thursday from Goldman Sachs and Citigroup. Goldman’s net income of $3.19 billion beat expectations on strong trading profits, but its stock fell on disappointment over a sharp fall in investment banking revenues. Citigroup reported a slightly smaller loss per share than expected but said credit losses remain high.

Investors drew some comfort from a government report that the number of newly laid-off workers filing claims for unemployment insurance fell last week. A report on manufacturing in the New York region also topped expectations.

“Things are going in the right direction but the fundamental economic improvement is slow,” said Robert Dye, senior economist at PNC Financial Services Group. “The tendency is for the markets to get ahead of themselves and have to be rebalanced periodically.”

Traders will be looking closely at earnings from major tech companies after the closing bell, including Google Inc., IBM Corp. and chip maker Advanced Micro Devices.

In early afternoon trading, the Dow fell 18.59, or 0.2 percent, to 9,997.27. The Standard & Poor’s 500 index fell 2.29, or 0.2 percent, to 1,089.73. The Nasdaq composite index fell 8.41, or 0.4 percent, to 2,163.82.

Three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 604.5 million shares compared with 587.5 million shares traded at the same point Wednesday.

On Wednesday, the Dow jumped 144 points to close at 10,015 — its biggest gain since Aug. 21 and highest close since Oct. 3 last year. Broader stock indexes also rallied to 2009 highs.

The Dow is up 53 percent since hitting a 12-year low in March, while the S&P 500 index is up 61.4 percent and the Nasdaq is up 71.2 percent.

In economic news, the Labor Department said the number of newly laid-off workers filing claims for unemployment insurance fell to its lowest level since early January. First-time claims for jobless benefits dropped to 514,000 from 524,000 the previous week. It was the fifth drop in six weeks and better than the 525,000 economists were expecting, according to Thomson Reuters.

Investors took some comfort from an index of manufacturing in New York indicated that demand has jumped in October. The main index from New York Federal Reserve’s Empire State Manufacturing Survey rose 16 points in October to 34.6, its highest level in five years.

Traders continued to track corporate earnings reports. Investors want to see companies grow their profits through sales and not just cost-cutting, which would signal that consumers and businesses are becoming more comfortable spending again.

Andrew Neale, partner and portfolio manager at Fogel Neale Partners in New York, said investors are on edge about Goldman’s report because it signals that even the strongest banks could still face difficulty as the economy recovers. The drop in some of the company’s revenue measures are raising concerns about how the company will generate higher profits.

“A lot of people think that this could be a high-water mark in terms of trading revenue,” he said.

Goldman fell $4.12, or 2.1 percent, to $188.16, while Citigroup lost 27 cents, or 5.4 percent, to $4.73.

Financials have led the market’s seven-month rally after getting pounded in late 2008 and early this year so some modest retreats aren’t alarming traders. Goldman has jumped 192 percent since March, while Citi has surged 363 percent.

Bond prices slipped as the economic reports signaled improvement in the economy. The yield on the benchmark 10-year Treasury note rose to 3.43 percent from 3.42 percent late Wednesday.

The dollar fell against other currencies. Gold fell.

Crude oil rose $1.54 to $76.52 a barrel on the New York Mercantile Exchange.

The Russell 2000 index of smaller companies fell 3.19, or 0.5 percent, to 620.75.

Overseas, Britain’s FTSE 100 fell 0.6 percent, Germany’s DAX index lost 0.4 percent, and France’s CAC-40 rose less than 0.1 percent. Japan’s Nikkei stock average jumped 1.8 percent.