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Dow Takes Triple-Digit Tumble on Disappointing Earnings

Dan Berman
Hot Stock Minute

Volatility up, markets down. Stocks reversed course again today with the Dow posting a triple-digit drop. Yesterday's gains vanished on weak earnings from some of the bigger banks. Traders also seemed to be digesting weak reports which came in after yesterday's closing bell.

Bank of America (BAC) shares tumbled 4.5% on a disappointing earnings report. The company posted profits of 20-cents a share, two cents below estimates. The bank did beat on revenues though they fell 8.4% to $23.8 billion from the same period last year. The company blamed the drop on sagging business in fixed income securities and mortgages. Net income did in fact quadruple from the same period a year ago, but that's only because in the earlier period the company took a number of charges.

Apple (AAPL) took another major bruising today plunging 5.5% to close at $402.80. Shares briefly traded below $400 earlier; a level not seen since late in 2011. Several factors dragged on the stock, including two separate analyst notes predicting a weak earnings report from the company. Further, a warning from Cirrus Logic (CRUS), a supplier of chips used in the iPhone, suggestis sales demand is down. Separately, DigiTimes is reporting iPad mini shipments could fall 20% to 30% from the last quarter to between 10 million to 12 million. Keep in mind Apple shares were trading at $705 back in September. The company reports its earnings next Tuesday.

Mattel (MAT) got its game on. Shares of the world's largest toymaker rose 2% on stronger-than-expected earnings reported this morning. Mattel earned 11-cents a share versus expectations of 9-cents. Revenue was just shy of $1 billion dollars. The maker of Barbie says American Girl was the standout in its portfolio. Monster High dolls are also selling well, as are traditional toys like Hot Wheels. The stock is up 26% over the last year, and has more than doubled in the past five years.

Investors were hungry for the NASDAQ's newest offering, Fairway Group Holdings (FWM). Shares of the regional supermarket chain popped 33% after its initial public offering. The company priced 13.65 million shares at $13 each, above the expected range of $10 to $12. Fairway currently has 12 locations and plans to add more in densely populated areas.

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