Earnings season is always a volatile time for the stock market, as one day’s positive news is often followed by bad news on subsequent days. Today, overall investor sentiment toward earnings was decidedly negative, and as we move into the heart of earnings season, the much more rapid pace of releases could lead to even more volatility. This morning, the Dow Jones Industrial Average (Dow Jones Indices:.DJI) made a triple-digit move for the third straight day this week: As of 11 a.m. EDT, it has lost 179 points. The broader market has fallen even more sharply.
Within the Dow Jones Industrial Average (Dow Jones Indices:.DJI), the big news came from Bank of America Corp (NYSE:BAC), which has dropped almost 5% after announcing earnings earlier this morning. The bank quadrupled its quarterly profit from the year-ago quarter, with loan-loss provisions continuing to fall and the bank’s capitalization continuing to improve. Yet weakness in the mortgage-lending business contributed to an overall drop in revenue, and as interest rates start to bottom out, the refinancing activity that has made up most of Bank of America Corp (NYSE:BAC)’s mortgage-related revenue will likely start drying up, and pressure on net interest margins will intensify. JPMorgan Chase & Co. (NYSE:JPM) faces many of the same problems, and its shares have declined almost 3% as investors fear that the entire banking sector could suffer from the disappearance of the favorable trends that have helped it recover from the financial crisis.
Beyond the Dow Jones Industrial Average (Dow Jones Indices:.DJI), earnings also had a big impact. Cirrus Logic, Inc. (NASDAQ:CRUS) has plunged nearly 14% after releasing preliminary figures for its just-ended fiscal fourth quarter. The major supplier for Apple Inc. (NASDAQ:AAPL) cited “a decreased forecast for a high volume product” as justifying its warning for both the previous and current quarters, and a Wall Street analyst followed suit with a downgrade of Cirrus Logic, Inc. (NASDAQ:CRUS) stock. Apple Inc. (NASDAQ:AAPL) also dropped further, with its 4.7% decline leading the stock to flirt with the $400 level, which it hasn’t breached since late 2011.
Finally, Magnum Hunter Resources Corp (NYSE:MHR) has lost a quarter of its value after disclosing in an SEC filing yesterday that it dismissed PricewaterhouseCoopers as its accounting firm. According to the filing, PricewaterhouseCoopers had identified several issues with the energy company, including certain deficiencies in internal controls. Magnum Hunter Resources Corp (NYSE:MHR) offered a remediation plan to address PwC’s concerns, but it nevertheless replaced PwC with an accounting firm called BDO USA. Investors have grown accustomed to selling at the first hint of accounting issues, and that’s clearly the case with Magnum Hunter today.
The article These Banks Sent the Dow Down Triple Digits originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger owns shares of Apple and warrants on Bank of America and JPMorgan Chase (NYSE:JPM). You can follow him on Twitter @DanCaplinger. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple, Bank of America, Cirrus Logic, and JPMorgan Chase.
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