Bank woes drag on stocks
Wall Street weakens again as JPMorgan Chase earnings are countered by BofA funding problems.
NEW YORK (CNNMoney.com) -- Stocks slid early Thursday as JPMorgan Chase's surprise profit was countered by reports that Bank of America needs billions more in funding to complete its purchase of Merrill Lynch.
The Dow Jones industrial average (INDU) dropped nearly 1% in the early going, and was down as much as 115 points before rebounding. The Standard & Poor's 500 (SPX) index lost 1.1% and the Nasdaq composite (COMP) fell 1%.
Stocks tumbled on Wednesday, with all three major gauges closing at 6-week lows. It was the sixth down session in a row for the Dow.
The weakness continued early Thursday, as investors considered the developments in the banking sector as well as news that Apple chief Steve Jobs will take a medical leave through the end of the second quarter.
Government reports on the job market and inflation were also in focus.
On Thursday, the U.S. Labor Department said that jobless claims totaled 524,000 in the week ended Jan. 10, an increase of 54,000 from the week before. That was more than expected.
The Labor Department said the Producer Price Index fell 1.9% in December. Without food and automobile sales, the wholesale index edged up 0.2%.
Financials: Early Thursday, JP Morgan Chase (JPM, Fortune 500) announced fourth-quarter profit of 7 cents per share, besting analyst expectations of a flat quarter, according to a consensus compiled by Thomson Reuters. The banking company reported a 1% decline in revenue to $17.2 billion in revenue, below the analysts' forecast of $18.8 billion.
JPMorgan Chase shares slipped about 2% in premarket trading.
"I think it's good news that JP Morgan Chase has better-than-expected earnings, but I don't think the numbers are going to dispel the pall that's been cast over the banking sector," said Robert Brusca, chief economist at Fact and Opinion Economics. "At the end of the day, 'bank' is a four-letter word."
Bank of America (BAC, Fortune 500) is negotiating for billions more in aid from the federal government to digest its recent acquisition of Merrill Lynch, according to a report in the Wall Street Journal.
The request for more aid comes as the Senate is poised to vote on a resolution that seeks to block the release of the second half of the $700 billion Troubled Asset Relief Program funds to the Treasury Department.
Tech: Apple CEO Steve Jobs said after U.S. markets closed Wednesday that he will take a medical leave of absence from the company until the end of June.
Apple (AAPL, Fortune 500) shares tumbled 4% Thursday morning.
Google (GOOG, Fortune 500) announced Wednesday that it would lay off 100 recruiters and close three offices. The cuts suggest the worsening economy is hitting even the most resilient tech firms.
Pharmaceuticals: Drugmaker Eli Lilly & Co. (LLY, Fortune 500) agreed to pay $1.42 billion to settle criminal and civil investigations into the marketing of its antipsychotic drug Zyprexa.
Lilly decided to plead guilty to one misdemeanor violation of the Food, Drug and Cosmetic Act. The company admitted to promoting the off-label use of Zyprexa as a dementia treatment for elderly patients from 1991 to 2001.
World markets: Stocks in Asia finished the session lower. European stocks were down despite the European Central Bank cut its benchmark lending rate by 50 basis points, to 2%.
Oil and money: U.S. light crude for February delivery fell $1.34 to $35.94 a barrel on the New York Mercantile Exchange.
The dollar rose versus the yen and euro. 
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