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Lisa Napoli: Stocks opened lower this morning after a weaker-than-expected profit report from Bank of America. The bank says its first quarter earnings tanked 77 percent. Marketplace’s Nancy Marshall Genzer reports.
Nancy Marshall Genzer: Analysts knew the bank’s earnings report would be bad, but they didn’t expect it to be this bad. They predicted Bank of America would earn a profit of 41 cents a share. The actual earnings: 23 cents a share. Still, economist Bernard Baumohl of the Economic Outlook Group says the bad news shouldn’t come as a surprise.
Bernard Baumohl: I can’t imagine people are stunned, because we know the banks still have a lot of problems they have to work out.
Chief among those problems? The subprime mess and credit crunch. Economist Nigel Gault of Global Insight says, traders’ pessimism could work to Bank of America’s advantage.
Nigel Gault: They tend to be quite forgiving if a company announces bad news, but they that all the bad news has now been announced so the future looks better.
That was the case for Citigroup last week. It posted a loss of more than $5 billion, but its stock went up.
In Washington, I’m Nancy Marshall Genzer for Marketplace.