IBM, Apple results batter stocks

By Melinda Peer, TheStreet

Updated at 12:25 p.m. ET

Stocks were sharply lower Tuesday as investors absorbed China's surprise rate increase and as Apple (AAPL) and IBM (IBM) shares fell. Bank of America (BAC) also said its third-quarter loss widened.

At 12:25 p.m. ET, the Dow Jones Industrial Average ($INDU) was down 98 points, or 0.9%, at 11,045. The S&P 500 ($INX) was falling 10 points, or 0.8%, to 1,175, and the Nasdaq ($COMPX) was down 24 points, or 1%, at 2,457.

Shares across basic materials and energy sectors were getting hit the hardest as the dollar index jumped 1.5% higher.

Investors had a lot on their plates Tuesday amid an influx of key earnings reports and news that China's central bank had hiked lending rates by 25 basis points for the first time in three years. The unexpected move came in response to Chinese concerns about inflation.

"The surprise move out of China is causing a lot of risk aversion so there's a strong rebound in the dollar. That's hitting commodities and equities," said Peter Cardillo, chief market strategist at Avalon Partners.

Despite beating analysts' top-line and bottom-line expectations late Monday, Apple and IBM were leading the market down, as investors were disappointed by Apple's iPad sales and IBM's tech services business. Apple shares were falling 1.9% to $312, while IBM's stock was off by 3% at $138.58.

Bank of America (BAC) said its loss widened to $7.3 billion, or 77 cents a share, in the third quarter. Excluding a $10.4 billion charge, the bank earned $3.1 billion, or 27 cents a share, surpassing estimates for 16 cents a share. The shares were up 0.6% to $12.41 in midday trading.

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Goldman Sachs (GS) said its third-quarter earnings dropped 40% to $1.9 billion, or $2.98 a share, beating expectations for a per-share profit of $2.32, according to Thomson Reuters. Shares were gaining 3.7% to $159.38 Tuesday.

Johnson & Johnson's (JNJ) third-quarter net income rose 2.2% to $3.42 billion, or $1.23 per share, as sales declined less than 1% to $14.98 billion. Analysts had expected the health care giant to earn $1.15 a share on $15.2 billion in revenue, according to Thomson Reuters. Shares of JNJ were down 0.7% to $63.44.

State Street (STT) reported third-quarter operating earnings of $540 million, or $1.08 a share, which marked an increase of $327 million, or 66 cents a share, over a year earlier. Excluding certain items, third-quarter earnings were 86 cents a share, compared with 71 cents a share a year ago. Analysts polled by Thomson Reuters had expected earnings of 83 cents. State Street shares were falling 0.5% to $41.02.

Coal miner Massey (MEE) is considering several strategic options, including a sale, according to a Wall Street Journal report. The options could include selling to another coal miner or a private-equity firm, buying another company or remaining independent, the report said. Massey stock was climbing 6% to $37.70.

Coca-Cola's (KO) third-quarter net income increased 8.4% to $2.1 billion, or 88 cents, as revenue rose 5% to $8.43 billion. Excluding certain items, the company earned 92 cents, beating the 89-cent average estimate. Shares were up 0.5% at $60.31.

UnitedHealth (UNH) said third-quarter earnings rose 23% to $1.14 a share on sales of $23.67 billion. Analysts had projected earnings of 84 cents on sales of $23.31 billion.  UNH shares were falling 2.3% to $35.41.

Bank of New York Mellon (BK) swung to a third-quarter profit but fell short of analysts' estimates. The company reported earnings from continuing operations of 51 cents a share, compared with estimates for 54 cents. Shares were down 0.5% to $26.49 Tuesday.

Shares of EMC (EMC) were rising 1.1% to $21.02 on record third-quarter sales of $4.21 billion and earnings of 30 cents a share that were in line with analysts' estimates.

Boston Scientific (BSX) and Yahoo! (YHOO) will report earnings after the closing bell. Analysts expect profits of 6 cents a share and 15 cents a share, respectively, according to Briefing.com.

Homebuilders began work on 610,000, or 0.3%, more homes in September, the Commerce Department said. Economists had expected to see 579,000 housing starts, according to consensus estimates listed on Briefing.com. The figure compares with a revised pace of 608,000 reported for August.

Applications for building permits fell 5.6% to 571,000, less than the 565,000 economists had projected. Still, the decline suggests that future homebuilding activity will decrease.

The American Petroleum Institute will issue its weekly report on crude oil inventories this afternoon. According to analysts polled by Platts, crude supplies are projected to increase by 2.1 million barrels in the week ended October 15.

The U.S. Treasury Department said it plans to sell another 1.5 billion shares of Citigroup (C) over the next few months as it continues to reduce its holdings in the bank. The government currently has a 12% stake. Citi shares were down 0.5% at $4.15.

Crude oil for November delivery was losing $2.15 at $81.65 a barrel. The stronger U.S. dollar was sending the December gold contract plunging $30.70 to $1,341.40 an ounce.

The benchmark 10-year Treasury note fell 1/32, increasing the yield to 2.516%. 

The FTSE in London was slipping 0.7%, while the DAX in Frankfurt was down by 0.3%. Hong Kong's Hang Seng gained 1.3%, and Japan's Nikkei added 0.4%.

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