Mid-Morning Market Update: Markets Drop; Bank of America Posts Upbeat Earnings

Following the market opening Wednesday, the Dow traded down 0.83 percent to 16,180.56 while the NASDAQ tumbled 0.60 percent to 4,201.78. The S&P also fell, dropping 0.70 percent to 1,864.57.

Leading and Lagging Sectors

Energy shares dropped by just 0.41 percent on Wednesday. Top gainers in the sector included Energy XXI (Bermuda) EXXI, Goodrich Petroleum GDP, and Ultra Petroleum UPL.

In trading on Wednesday, financial shares were relative laggards, down on the day by about 1.40 percent. Top losers in the sector included Itaú Unibanco Holding S.A. ITUB, down 6 percent, and Banco Macro S.A. BMA, off 4.6 percent.

Top Headline

Bank of America BAC reported better-than-expected earnings for the third quarter.

The Charlotte, North Carolina-based bank posted quarterly net income of $168 million, down from $2.497 billion, in the year-ago period. On a per share basis, the bank posted a loss of $0.01, versus a year-ago profit of $0.20. The results included a pretax charge of $5.3 billion related to DoJ Settlement, which impacted earnings by $0.43 per share.

Its revenue declined to $21.434 billion versus $21.743 billion, while revenue, net of interest expense, on an FTE basis, excluding DVA, rose 1% to $21.2 billion from $21.0 billion. However, analysts were expecting a loss of $0.09 per share on revenue of $21.34 billion.

Equities Trading UP

CSR plc CSRE shares shot up 30.18 percent to $54.61 after Qualcomm QCOM announced its plans to acquire CSR for $2.5 billion.

Shares of Penford PENX got a boost, shooting up 71.06 percent to $18.80 after Ingredion INGR announced its plans to buy Penford for about $340 million.

Diodes DIOD shares were also up, gaining 6.71 percent to $22.90. Raymond James upgraded Diodes from Outperform to Strong Buy.

Equities Trading DOWN

Shares of Shire plc SHPG were down 21.67 percent to $191.56 as AbbVie ABBV said it will reconsider its merger agreement due to proposed changes in tax regulations.

iGATE IGTE shares tumbled 9.18 percent to $31.57 on Q3 results. The company reported a quarterly profit of $37.3 million, versus a year-ago profit of $31.9 million.

KeyCorp. KEY was down, falling 4.97 percent to $12.25 after the company reported weaker-than-expected third-quarter results.

Commodities

In commodity news, oil traded down 0.24 percent to $81.64, while gold traded up 0.53 percent to $1,240.80.

Silver traded up 0.53 percent Wednesday to $17.50, while copper fell 1.47 percent to $3.04.

Euro zone

European shares were lower today. The eurozone’s STOXX 600 dropped 2.8 percent, the Spanish Ibex Index fell 2.8 percent, while Italy’s FTSE MIB Index declined 3.1 percent. Meanwhile, the German DAX declined 3.02 percent and the French CAC 40 tumbled 3.42 percent while UK shares fell 2.61 percent.

Economics

The producer price index fell 0.1% in September, versus economists’ expectations for a 0.1% gain.

US retail sales declined 0.3% in September, versus economists’ expectations for a 0.3% fall.

The Empire State manufacturing index dropped to 6.2 in October, versus 27.5 in the previous month.

US business inventories rose 0.20% in August, versus economists’ expectations for a 0.40% gain.

The Federal Reserve will release its latest Beige Book report at 2:00 p.m.

The Treasury is set to auction 4-and 52-week bills.