Market Update - The futures had been up a few points early this morning, benefiting from a very quiet overnight int’l session (no major eco news/market movements outside of Japan), the BP Gulf progress, and the Goldman settlement (the Google disappointment from last night was being shrugged off early this morning). The futures ticked to the highs of the morning in the immediate wake of GE’s earnings (which hit at 6:30amET), but the BoA number at 7amET hit the futures from their highs and weighed on the entire market (and remains the big story of the day). The SP500 Bank index is off more than 4%, by far the weakest group in the market. The problems are several-fold: 1) the IB revenue lines fell more than expected (esp. FI, off more than 50% Q/Q); 2) credit is disappointing (NPLs actually up small Q/Q although NCOs did dip); 3) mgmt on the call was much more negative than expected on the impact to their debit unit from the Dodd/Frank fin reg reform legislation (the Durbin amendment part). Outside of BoA, the newsflow this morning was relatively benign-to-positive (IR and Daimler both issued upside preannouncements; SBUX made pos. comments in a Reuters interview; AMD was bullish on macro demand trends; GE was better and pos. on the outlook, etc), but selling pressure in the banks is more than outweighing (although also weighing on sentiment – MAT and GCI are both off ~7% after their respective earnings releases).
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