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Global Stock Market in Late January; Wall Street's Dow Tumbles 116

Thursday’s selloff landed the markets in the red on the week, adding to last week’s plunge, which was the Dow’s worst since March 2009. Wall Street continues to respond negatively to earnings season in the face of a number of upbeat results.

Wall Street’s late January pullback deepened on Thursday as ugly outlooks from tech companies and troubling economic indicators propelled the Dow to its lowest close in nearly three months and pushed the Nasdaq Composite down nearly 2%.

Today’s Markets

The Dow Jones Industrial Average fell 115.70 points, or 1.13%, to 10120.46, the Standard & Poor’s 500 dropped 12.97 points, or 1.18%, to 1084.53 and the Nasdaq Composite lost 42.41 points, or 1.91%, to 2179.00. The FOX 50 slid 7.76 points, or 0.97%, to 789.02.

While stocks ended solidly in the red, the markets staged a late comeback after Ben Bernanke’s reconfirmation as Federal Reserve chairman cleared a pivotal procedural vote in the U.S. Senate. Shortly after the closing bell the Senate voted 70-30 to sign off on four more years of Bernanke.

Still, Thursday’s selloff landed the markets in the red on the week, adding to last week’s plunge, which was the Dow’s worst since March 2009. The blue chips ended at their worst level since Nov. 5.

“There’s a lot of anxiety about whether we’re pulling back or in the beginning of a further downside move,” said Michael James, senior equity trader at Wedbush Morgan Securities. “It’s just a very uncomfortable time right now for the equity markets. People are becoming very discouraged.”

Most of the Dow’s 30 components lost ground, led by Hewlett-Packard (HPQ: 47.75, n.a., n.a.%), American Express (AXP: 37.42, n.a., n.a.%) and Cisco (CSCO: 22.52, n.a., n.a.%). The index’s biggest winners were Bank of America (BAC: 15.36, n.a., n.a.%) and Procter & Gamble (PG: 62.59, n.a., n.a.%), which posted better-than-expected results.

Wall Street continues to respond negatively to earnings season in the face of a number of upbeat results. For example, shares of 3M (MMM: 80.61, n.a., n.a.%), Potash (POT: 104.31, n.a., n.a.%), T. Rowe Price (TROW: 50.6, n.a., n.a.%) and Lockheed Martin (LMT: 76.09, n.a., n.a.%) all closed in the red despite exceeding expectations.

“It speaks to some degree to how much we rallied going into this particular earnings season. The question is: What’s priced in? Perhaps a lot of the positive earnings we’re seeing were expected,” said Dan Greenhaus, chief economic strategist at Miller Tabak He noted that unlike in many of the previous earnings seasons, the S&P 500 soared 7.3% in the run-up to fourth-quarter earnings, meaning the bar was set extra high.

While most companies have reported stronger-than-expected top and bottom-line results for the fourth quarter, many are either maintaining or even lowering their guidance for the current quarter and 2010.

“That feeds into the economic data we’ve seen in recent weeks that has been less-than-spectacular. It’s leading many to believe the economy is, at best, flattening out here and certainly not growing at a pace that would warrant stock prices to be at where they’re at,” said Paul Nolte, managing director at Dearborn Partners.

The negative outlook story slammed the tech markets on Thursday as Qualcomm (QCOM: 40.48, n.a., n.a.%) closed 14% lower after slashing its fiscal 2010 sales outlook and phone maker Motorola (MOT: 6.48, n.a., n.a.%) tumbled 12% after warning of a surprise first-quarter loss. The Nasdaq Composite, down nearly twice as much as the broader indexes, was also reeling from Apple (AAPL: 199.29, n.a., n.a.%), which more than gave back its iPad-fueled Wednesday gains.

Meanwhile, Thursday’s economic news was generally disappointing and served as a reminder of the fragile nature of the U.S. recovery. Durable goods orders, which measure demand for big-ticket items like washing machines and computers, increased by just 0.2% in December, the Commerce Department said, well shy of forecasts for a rise of 2%.

Also, the Labor Department said weekly initial jobless claims fell by 8,000 to 470,000, missing economists’ expectations for a drop to 450,000.

Wall Street received a fleeting boost from the Senate, which relieved the markets by voting 77 to 23 to end debate on Bernanke’s confirmation before ultimately approving him for a second term. Unexpected resistance to the confirmation spooked the markets last week as Bernanke has gained the trust of the markets.

The State of the Union speech appeared to have just a muted impact on the markets Wall Street opened slightly higher before tumbling. President Barack Obama said job creation is the top priority of 2010 but that he won’t give up on efforts to overhaul the health-care and financial systems. Much of Obama’s speech had already been telegraphed ahead of time.

In the commodity markets, crude oil and gold inched lower amid a stronger U.S. dollar. Crude fell 3 cents a barrel, or 0.04%, to $73.64. Gold sank 90 cents a troy ounce, or 0.08%, to $1084.80.

Corporate Movers

Ford (F: 11.4, n.a., n.a.%) earned a non-GAAP profit of 43 cents a share, exceeding the Street’s view of 26 cents and capping off its first annual profit since 2005. The auto maker, which also posted better-than-expected revenue, predicted it will also be profitable in 2010. 

Procter & Gamble (PG: 62.59, n.a., n.a.%) beat the Street with a 7% decline in net income to $1.49 a share. P&G’s sales also rose by a better-than-expected 6.4% to $21.03 billion and boosted its full-year sales outlook.

3M (MMM: 80.61, n.a., n.a.%) topped expectations with EPS of $1.30, compared to estimates for $1.21, and slightly lifted its full-year guidance.

AT&T (T: 25.54, n.a., n.a.%) matched estimates with a profit of 51 cents a share thanks to an industry-leading 2.7 million new subscribers. The telecom giant’s revenue sank 1% to $30.9 billion, also matching expectations.

Eastman Kodak’s (EK: 5.93, n.a., n.a.%) stock surged 25% after the imaging company posted an adjusted-profit of $1.12 a share, blowing away the 18-cent profit analysts had forecasted.

Bristol-Myers Squibb (BMY: 24.1, n.a., n.a.%) posted a better-than-expected non-GAAP profit of 47 cents on revenue of $5.03 billion. Analysts had forecasted EPS of 41 cents and revenue of $5 billion. Bristol-Myers sees non-GAAP 2010 EPS of $2.15 to $2.25, compared to the Street’s view of $2.19.

Lockheed Martin (LMT: 76.09, n.a., n.a.%) beat the Street with EPS of $2.17 and revenue of $12.52 billion, compared to estimates for $1.99 on $12.47 billion. The defense contractor also upped its 2010 EPS and revenue guidance.

Global Markets

The U.K.’s FTSE 100 tumbled 1.37% to 5145.74, France’s CAC 40 slid 1.89% to 3688.79 and Germany DAX lost 1.82% to 5540.33.

In Asia, Tokyo’s Nikkei 225 advanced 1.58% to 10414.29, Hong Kong’s Hang Seng closed up 1.61% to 20356.37 and China’s Shanghai Composite added 0.25% to 2994.14.

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