Disney, the second-largest U.S. media company, slumped 7.9 percent after profit decreased by almost a third. Kraft Foods, the world’s second-largest foodmaker, loss 9.2 percent after saying earnings will be less than it previously forecast as the stronger dollar hurts overseas results. Bank of America Corp. tumbled 11 percent to an 18-year low on concern the nation’s largest lender by assets needs more government aid.
The Standard & Poor’s 500 Index lost 0.8 percent to 832.23, erasing an early gain of 1.6 percent. The Dow Jones Industrial Average slid 121.7 points, or 1.5 percent, to 7,956.66. The Russell 2000 Index decreased 1 percent.
Stocks rallied in early trading after the Institute for Supply Management said non-manufacturing businesses shrank less than economists forecast and investors speculated the White House may guarantee banks’ illiquid assets in an effort to shore up the financial system.
The S&P 500 has dropped 7.9 percent this year as companies from Microsoft Corp. to Procter & Gamble Co. reported disappointing earnings and the economy shrank at the fastest pace in 26 years. The index is still 11 percent above an 11-year low on Nov. 20 amid optimism economic stimulus legislation developing in Congress will spur growth.