Stocks decline after BofA profit falls short

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NEW YORK -- Wall Street pulled back Monday after a weaker-than-expected profit report from Bank of America Corp. stirred concerns about the health of corporate earnings.

Bank of America's news that its first-quarter earnings fell 77% on write-downs and widening credit losses comes after a week in which big-name companies in general turned in better-than-expected numbers for the first quarter. Wall Street has at times worried that a slowing economy and a potentially hesitant consumer would crimp profit-making in the first three months of the year.

The reports helped drive the major indexes to gains of more than 4% last week so some profit-taking likely didn't come as a surprise to investors Monday.

With little in the way of economic data scheduled to arrive this week, investors are looking at a big flow of corporate reports for insights into the well-being of the economy. Beyond Bank of America, Merck & Co. reported a stronger-than-expected first-quarter profit. Both Bank of America and Merck are among the 30 stocks that comprise the Dow Jones industrial average.

In late morning trading, the Dow fell 72.71, or 0.57%, to 12,776.65.

Broader stock indicators also declined. The Standard & Poor's 500 index fell 7.75, or 0.56%, to 1,382.58, and the Nasdaq composite index fell 6.17, or 0.26%, to 2,396.80.

Bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.74% from 3.70% late Friday. The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude fell 82 cents to $115.87 per barrel on the New York Mercantile Exchange, after jumping to a record $117.40 per barrel after a rocket struck a Japanese oil tanker near Yemen and as militants in Nigeria said they had attacked pipelines. An OPEC official said over the weekend that the group isn't likely to increase production also supported prices.

In corporate news, Bank of America said its profit totaled $1.21 billion, or 23 cents per share. Analysts had been expecting the company, which recently acquired mortgage lender Countrywide Financial, to report earnings of 41 cents per share, according to Thomson Financial. The stock fell 85 cents, or 2.2%, to $37.71.

Merck said its profit nearly doubled in the first quarter because of a $1.4 billion distribution from a partner drug company. Merck rose 8 cents to $39.84.

Eli Lilly and Co. fell $2.39, or 4.6%, to $49.68 after reporting that strong sales for Cymbalta and Cialis helped double the drug maker's first-quarter earnings. Earnings rose to $1.06 billion from $508.7 million a year earlier, when the company booked a big charge. Still, the results missed Wall Street's expectations.

Mattel Inc. said higher product costs and legal fees led the company to post a loss for the first quarter. The world's largest toymaker, which makes Barbie dolls, Fisher-Price toys and Matchbox cars, said it saw a loss of $46.6 million compared with earnings of $12 million a year earlier. The results fell short of what Wall Street had been expecting and the stock fell $1.60, or 7.4%, to $20.18.

Beyond corporate results, investors also weighed action by the Bank of England on Monday to ease tightness in the credit markets. The bank said it would enact a $100 billion plan that would allow banks to swap mortgage-backed securities for British Treasury bills.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 361.7 million shares.

The Russell 2000 index of smaller companies fell 4.87, or 0.68%, to 716.20.

Overseas, Japan's Nikkei stock average slipped 0.13%. In afternoon trading, Britain's FTSE 100 fell 0.30%, Germany's DAX index declined 1.00%, and France's CAC-40 fell 1.22%.
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