- The Washington Times - Monday, April 13, 2009

NEW YORK (AP) - Wall Street retreated Monday as investors awaited a flurry of earnings reports and data that could provide insight into the direction of the economy.

Major stock indicators fell about 1 percent, including the Dow Jones industrial average, which dropped about 100 points. Several big banks bucked the market’s slide as investors optimistically bought shares ahead of their quarterly reports due this week.

The market was unsettled by a New York Times report saying the Treasury has directed General Motors Corp. to lay the groundwork for a potential bankruptcy filing by June 1. GM might be forced to file if it cannot complete a plan to exchange debt for equity, according to the report.

A White House official, speaking on condition of anonymity because no specifics of the GM plan have been announced, told The Associated Press that any speculation about a GM bankruptcy filing was “premature.” GM fell 33 cents, or 16.2 percent, to $1.71.

Jamie Cox, managing partner at Harris Financial Group, said the possible consequences of a GM bankruptcy filing will likely weigh on the market.

“Think of the economic fallout potential,” Cox said. “It’s inconceivable (GM) gets in to bankruptcy” and gets out quickly, he added.

Investors are also looking to a spate of earnings results throughout the week, including reports from key financial players including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. Financial companies had been among the hardest hit by the economic downturn and credit crisis, but they have also helped lead a rally over the past month.

Goldman rose 3.2 percent, JPMorgan rose 0.8 percent and Citigroup rose 11.8 percent, while Bank of America Corp. rose 7.8 percent. Analysts said some of the buying could reflect traders stepping in to cover misplaced bets that banks would fall when they post results this week. Traders who sell stocks “short” are forced to buy to avoid further losses.

“What we see is a lot of hope in the market that this quarter will finally show some legitimate bottom-line results above and beyond what we saw last quarter,” said Jason O’Donnell, a senior bank analyst at Boenning & Scattergood Inc. “It’s more a function of hope rather than any evidence that that is going to happen.”

In midday trading, the Dow fell 111.83, or 1.4 percent, to 7,971.55.

Broader stock indicators also slid. The Standard & Poor’s 500 index fell 8.90, or 1 percent, to 847.66, and the Nasdaq composite index fell 20.55, or 1.2 percent, to 1,631.99.

On Thursday, a surprise announcement by Wells Fargo & Co. that it will report a record quarterly profit for the first quarter helped send the market sharply higher ahead of a long weekend. Markets were closed for Good Friday.

The Dow has rallied for five weeks, but last week showed increased volatility as investors prepared for earnings reports. The Dow lost 2.8 percent over Monday and Tuesday as investors became worried about potentially weak earnings reports. But after the Wells Fargo report Thursday, the Dow surged and ended up 0.8 percent for the week.

Investors will also get earnings results this week from key companies in other industries, such as Intel Corp., Johnson & Johnson and General Electric Co.

Investors also will receive key economic reports on inflation, housing and manufacturing throughout the week.

In corporate news, prescription benefits manager Express Scripts Inc. said it will buy the pharmaceutical benefit management subsidiaries of health insurer WellPoint Inc. for $4.68 billion. Shares of both companies rose _ WellPoint gained $2.41, or 6 percent, to $42.75 while Express Scripts rose $4.83, or 9.8 percent, to $54.

Bond prices were mixed. The yield on the benchmark 10-year Treasury note fell to 2.85 percent from 2.92 percent late Thursday. The yield on the three-month T-bill was flat at 0.17 percent from late Thursday.

The dollar was mixed against other major currencies, while gold prices rose.

Light, sweet crude fell $3.01 to $49.23 a barrel on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average fell 0.4 percent. Major European markets were closed Monday for Easter.

_____

Associated Press Writer Steven R. Hurst in Washington contributed to this report.

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