Weak Earnings Pummel Stocks

Stocks fell right off the cliff at the opening bell today, a big sell-off that was anticipated by futures trading and the 7 percent dive of Japan's Nikkei overnight (for us).

In the first 15 minutes of trading, the Dow is down 230 points, or 2.5 percent.

The S&P 500 is down 2.7 percent, while the Nasdaq is down 1.3 percent.

Wall Street today, and the remainder of this week, is focused on third-quarter earnings and a lot of them look pretty ugly. This will be the pattern for this quarter, next quarter and probably into next year -- companies will be shaking out the effects of the financial crisis on their balance sheets.

Occasionally, as on Monday, we'll see a giddy rally on Wall Street, but then the markets will turn their attention soberly, and bearishly, back to earnings and the underlying fundamentals of the economy.

This morning, Wachovia reported a $24 billion third-quarter loss, which is why it's being purchased by Wells Fargo.

Profits at Boeing were down 38 percent. This company is getting killed by a machinist's strike, though Boeing said this morning it is still on schedule for 2009 delivery of the company's 787 Dreamliner, its important new passenger plane.

Drug giant Merck & Co. said its third-quarter profit fell 28 percent and it will cut 10 percent of its workforce, or 7,200 jobs.

The contraction is underway.

Meanwhile, blame and recriminations begin: Rep. Henry Waxman's (D-Calif.) House Oversight committee holds a hearing at 10 a.m. today focusing on the credit ratings agencies. Schedule to appear are current and former executive's from Moody's, Standard and Poor's, Fitch and Egan-Jones.

Expect the line of questioning to go something like this: "Tell us why exactly you fell down on the job?"

--Frank Ahrens