Stocks Skittish Out of the Gate

Rocky earnings reports and the impending Fed meeting were weighing on all three major indices.
By Sarina Penn ,

Updated from 8:04 a.m. EDT

Wall Street was on edge Tuesday, and stocks gave back ground at the open as investors dealt with another installment of uneven earnings reports and an impending two-day

Federal Reserve

meeting.

The

Dow Jones Industrial Average

was off 20 points to 12,851, and the

S&P 500

surrendered 3 points at 1394. The

Nasdaq Composite

lost 5 points to 2420. All three were down around 0.2%.

After the prior close, the newly public

Visa

(V) - Get Report

said first-quarter earnings jumped 27.6% on a spike in revenue, which on an adjusted basis topped the average Wall Street estimate. Despite this, as well as positive initial ratings from SunTrust and Wachovia, investors took down shares by 5%.

Also, mortgage lender

Countrywide

(CFC)

fell 2.9% after losing $893 million, or $1.60 a share, in the first quarter, as its credit-loss provision rose to $1.52 billion and charge-offs more than doubled from the prior quarter.

Bank of America

(BAC) - Get Report

agreed to take out the company in January.

Meanwhile, Dow component

Merck

(MRK) - Get Report

slid 7.5% after the Food and Drug Administration rejected its proposed cholesterol drug, MK-0524A, with a not-approvable letter. The drug, which was meant to raise levels of "good" cholesterol in the body, was expected to be named Cordaptive.

Elsewhere in the financial space, Germany's

Deutsche Bank

(DB) - Get Report

reported that $4.2 billion in first-quarter writedowns have led its first quarterly loss in five years. Also, German insurance giant

Allianz

(AZ)

said it will probably be forced to write off $1.4 billion in bad assets, which will contribute to pulling its profit down 66% from a year earlier and make its medium-term goals "harder" to achieve.

Oil companies were flush with positive news, however, as the recent crude-futures climb fattened first-quarter results.

Royal Dutch Shell

(RDS.A)

said its first-quarter profit ballooned 25% to $9.08 billion, and

BP

(BP) - Get Report

reported a 63% surge in earnings to $7.6 billion.

Last time out, stocks went out little changed as investors held back ahead of the Fed gathering and digested a round of merger-related news. At the end of the day, the

Dow Jones Industrial Average

lost 20 points to 12,872, and the S&P 500 gave up about a point at 1396. The

Nasdaq Composite

was down roughly a point to 2424.

Meanwhile, the Fed will begin its two-day meeting, and it is widely expected to yield a 25-basis-point cut of the fed funds target rate on Wednesday. The overnight lending rate, which currently stands at 2.25%, has been brought down by 300 basis points over the past few months, and many observers have predicted that the upcoming decision will mark a pause in that easing cycle.

On the economic docket, the Conference Board is due to release consumer-confidence numbers at 10 a.m. EDT.

Commodity prices were backing off. Crude oil shed 74 cents to $118.01 a barrel, and gold futures slid $6.70 to $888.80.

Treasury prices were edging higher. The 10-year note was up 2/32 in price to yield 3.82%, and the 30-year bond added 5/32 in price, yielding 4.55%.

Overseas markets were mixed. In Asia, Tokyo's Nikkei 225 rose 0.2% overnight to 13,894, and Hong Kong's Hang Seng Index climbed 1%. Among European exchanges, the FTSE 100 in London tacked on 0.4%. Germany's Xetra Dax and the Paris Cac, however, were off 0.6% and 0.4%, respectively.

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