The Dow Slumps Again
The Dow Jones Industrial Average (INDEX: ^DJI) seemed to overcome yesterday's bleeding early in the day, but by close it had fallen another 25 points, or 0.2%. A report this morning showed new home sales were up 5.7% sequentially, its greatest gain since April 2010, but shares fell after the Federal Reserve concluded its meeting with no major announcement or rate change, though the market was not expecting one.
Two Dow components reported earnings this morning. Shares of AT&T (NYS: T) opened sharply lower but bounced back to close the day down 0.8%. Ma Bell added just 151,000 new postpaid subscribers in the quarter, well short of the 319,000 it gained in the quarter a year ago, and far behind rival Verizon, which signed up 1.5 million new customers last quarter. Verizon has benefited in part from its huge head-start in 4G LTE coverage. Part of AT&T's problem seems to be that a greater percentage of its customers already own a smartphone, so it has less of an opportunity to upgrade current customers and, having offered the iPhone the longest, has already made that pitch to prospective customers. Earnings per share of $0.63 beat estimates of $0.60, but revenue fell short of the Street.
Boeing (NYS: BA) took the opposite course, popping early but ultimately closing down 0.15%. The aircraft maker said it is building airplanes faster and thus improving cash flow as the planes are paid for on delivery. Commercial revenue increased 23% in the quarter to $12.2 billion, and the manufacturer expects to deliver 25% more commercial planes this year than it did in 2011. Despite the production increase, earnings per share dropped 8% to $1.35 on higher pension costs, but that still beat estimates of $1.12 per share. Revenue matched the Street's view at $20 billion, and the company raised 2012 EPS guidance to a range of $4.80-$4.95 from a range of $4.40-$4.60.
Elsewhere, the Department of Justice announced a $1 billion-plus lawsuit against Bank of America (NYS: BAC) on charges of mortgage fraud in its Countrywide division against Fannie Mae and Freddie Mac. The lawsuit alleges that the lender was loosening mortgage requirements while telling Fannie and Freddie the opposite, and that its underwriting process eventually led to "widespread falsification" of mortagage data. Shares of Bank of America, which purchased Countrywide in July 2008, hardly flinched at the charges and finished the day down 0.5%.
Finally, Cisco (NAS: CSCO) was by far the Dow's biggest mover on the day, falling 3.5% after rival Juniper Networks reported downbeat earnings and cut its forecast, sending its own shares down 9%.
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The article The Dow Slumps Again originally appeared on Fool.com.Jeremy Bowman has no positions in the stocks mentioned above. The Motley Fool owns shares of Bank of America. Motley Fool newsletter services recommend AT&T. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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