Weak earnings drag stocks lower in early trading

10:53 am | August 7, 2013

NEW YORK (AP) — Disappointing results from big companies and a slump in bank stocks tugged the stock market lower early Wednesday, putting major indexes on track for their third straight daily drop.

The Standard & Poor’s 500 index was down 11 points, or 0.6 percent, to 1,686 after the first hour of trading. All 10 of the index’s industry groups fell.

The Dow Jones industrial average fell 79 points, or 0.5 percent, to 15,438. The Nasdaq composite lost 21 points, or 0.6 percent, to 3,645.

Bank stocks fell the most in early trading following news that the government accused Bank of America of civil fraud. In separate lawsuits, the Justice Department and the Securities and Exchange Commission said the country’s second-largest bank failed to tell investors about the risks involved in a 2008 sale of mortgage-backed bonds. BofA dropped 22 cents, or 2 percent, to $14.42.

Walt Disney reported quarterly earnings late Tuesday that narrowly beat Wall Street’s estimates, but revenue came up short. Disney’s executives also said a weak box-office welcome for “The Lone Ranger” movie this summer means it will have to take a steep loss in the current quarter. Disney slumped $2.80, or 4 percent, to $64.25.

Major stock indexes have drifted lower this week, backing away from all-time highs. The S&P 500 sank 0.6 percent on Tuesday, its biggest drop since June 24.

For the week, the S&P 500 is off 1.4 percent, and the Dow is down 1.5 percent.

In the market for U.S. government bonds, the yield on the 10-year Treasury note was trading at 2.62 percent, down from 2.64 percent late Wednesday.

Among other companies in the news:

— Ralph Lauren plunged $11.67, or 6.2 percent, to $177.84. The luxury retailer reported a 6 percent drop in income on sluggish store sales and gave a cautious sales forecast.

— First Solar fell $5.83, or 12 percent, to $41.10 after reporting results late Tuesday that fell short of Wall Street’s expectations. The company also cut its profit outlook.

— Zillow, which operates a real-estate website, dropped $6.23, or 7 percent, to $86.19. After the market closed Tuesday, the company reported a loss in the second quarter as its costs nearly doubled.

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