The Dow Jones Industrial Average (^DJI 0.00%) is down after Bank of America (BAC 5.94%) and Intel (INTC 0.84%) both reported weaker-than-expected earnings, pulling their sectors down with them. All but three of the 30 Dow stocks are down for the day, with Johnson & Johnson among the few making gains. As of 1:15 p.m. EDT the Dow is down 157 points, or 1.06%, to 14,599. The S&P 500 (^GSPC 1.86%) is down 1.7% to 1,548.
Intel is down 0.5% after yesterday's after-hours earnings report fell short of analyst expectations. Estimates called for a 22.5% drop in earnings per share to $0.41 and a 2% drop in revenue to $12.61 billion. Intel reported EPS of $0.40 and revenue of $12.58 billion. Intel and other tech stocks were hit last week when market researcher IDC reported that PC sales were down 14% in Q1, falling far more than its earlier prediction of 8%. Intel's earnings validate that report and are one of the two major reasons the tech sector as a whole is down today. Looking forward, Intel expects sales to remain roughly constant in the second quarter due to slowing PC demand. It kept its forecast for the rest of the year constant.
Bank of America is down 6.2% after the bank reported this morning that its earnings were quadruple those of last year but were nonetheless weaker than analyst expectations. Earnings were $0.20 per share, below analyst expectations of $0.20 per share, while revenue was $23.7 billion, beating analyst expectations of $23.49 billion. Investors were disappointed that the bank's rise in earnings came largely from cost-cutting, rather than growth in income. Also, investors were disappointed that there was not more mortgage lending at a time when new housing starts are nearing five-year highs.
Today's Dow leader
Today's Dow leader is Johnson & Johnson (JNJ 2.04%), up 0.8%. The health care company reported earnings yesterday that beat analyst expectations of $1.40 per share in earnings and revenue of $17.43 billion. Johnson & Johnson earned $1.44 per share on revenue of $17.5 billion. Health care companies' results are largely independent of the economy and more dependent on government regulations and company performance.
Johnson & Johnson stock has risen 19.7% so far this year, outpacing the Dow's 11.4% rise. In the company's earnings release, the company confirmed its guidance for full-year earnings of $5.35 to $5.45 per share. At today's price, that gives Johnson & Johnson's stock a forward P/E ratio of 15.7.