Boeing reported a profit of $978 million

Boeing reported a profit of $978 million, or $1.28 a share, down from $1.39 billion, or $1.84 a share, a year earlier.

Core operating earnings--which adjusts to exclude pension components related to market fluctuations and other impacts--were $1.46 compared with $1.92 a year earlier, which included 52 cents a share related to a favorable tax settlement.

Revenue increased 14% to $22.3 billion.

Analysts polled by Thomson Reuters most recently projected earnings of $1.19 on revenue of $22.36 billion.

Apple erases $17 billion from stock market

Apple Inc.’s near 4% drop wiped out $17 billion from the U.S. stock market on Monday, pushing two of the three benchmark indexes into negative territory.

Apple AAPL +0.15% shares fell $18.55, or 3.6%, to end at $501.75 after the Wall Street Journal and Japan’s Nikkei reported that the company had cut iPhone production plans because sales had come in below expectations.

The S&P 500 index SPX -0.09%  shed 1.37 point, or less than 0.1%, to 1,470.68, with telecommunications hardest hit and consumer staples faring best among its 10 industry groups.

“It would be positive without,” Apple, said Howard Silverblatt, senior index analyst at the S&P Indices, the stock’s impact on the index of 500 public companies.

The Dow Jones Industrial Average DJIA +0.14%  rose 18.89 points, or 0.1%, to 13,507.32, with Hewlett-Packard Co. HPQ +4.89%  leading the gains after J.P. Morgan upgraded the personal-computer maker to neutral from underweight. H-P also reclaimed the top PC-maker ranking from Lenovo Group Ltd.

International Business Machines Corp. IBM -0.14%  dropped 0.9% after J.P. Morgan downgraded it to neutral from overweight.

Shares of Dell Inc. DELL +12.96%  rallied 13% after Bloomberg News reported that the company was in buyout talks with private-equity firms.

Sprint Nextel Corp. S -3.89%  dropped 3.9% after the stock was downgraded by some brokerage firms. Read more about Monday’s biggest gaining and declining stocks.

The Nasdaq Composite COMP -0.26%  lost 8.13 points, or 0.3%, to 3,117.50.

Apple has a significant impact on the major stock indexes. It has a 3.8% weight in the S&P 500 and a 10% weight in the Nasdaq Composite, and is the largest stock on both. It’s not a member of the Dow average. Read more about the decline in Apple’s share price.

“In terms of the general negative sentiment, it’s a combination of Apple and a bit of poor industrial production number out of Europe. That was a pretty ugly wake-up call,” said Bill Stone, chief investment strategist at PNC Wealth Management. Industrial output for the 17-nation euro zone dropped 0.3% in November.

Decliners and advancers ran in a virtual dead heat on the New York Stock Exchange, where 590 million shares traded.

Composite volume approached 3 billion.

“As the week wears on, we’ll have a much more robust earnings calendar. Of those 27 S&P 500 companies reporting so far, they’ve lowered estimates significantly in the last three months,” said Art Hogan, market strategist at Lazard Capital Markets.

Companies reporting so far have managed to “squeeze out some sort of beat of lowered expectations,” said PNC’s Stone.

Of the first 27 companies in the S&P 500 to report fourth-quarter results, 67% exceeded earnings-per-share growth expectations, 15% were in line and 18% missed, according to Nick Raich, director of research at Key Private Bank. Of those companies, which represent 5% of the 500 that will eventually report, 11% raised their first-quarter 2013 guidance; 19% maintained and 70% lowered their outlooks.

“The new consensus expectation for fourth-quarter 2012 earnings growth is only 2%,” said Raich. “The guidance companies are providing after reporting results is still very weak.” 

In Washington, President Barack Obama talked about efforts to reduce the U.S. deficit at a Monday news conference in which he urged lawmakers not to use the debt ceiling as leverage in the political wrangling over government spending.

With a battle looming with Congress in the weeks ahead over hiking the $16.4 trillion debt ceiling, Republican lawmakers are mulling a government shutdown or default as a way to force cuts in government spending. Read a blog post on the U.S. Treasury thinking the unthinkable about the debt ceiling.

In separate statements, Senate Republican leader Mitch McConnell called the debt-ceiling debate the “perfect time” to confront government spending, and House Speaker John Boehner also indicated his intention to link spending cuts to hiking the debt ceiling.

The Treasury market did not signal distress over the danger of a government default, with yields on the benchmark 10-year note 10_YEAR +0.16%  off 1 basis point, or 0.01 percentage point, to 1.85%.

Federal Reserve Chairman Ben Bernanke spoke at 4 p.m. Eastern in Michigan, following comments delivered by Chicago Fed President Charles Evans that the central bank should continue to keep monetary policy accommodative as lawmakers cut U.S. spending.

“The market will be watching Bernanke to get a better take on when the Fed might start to take the punch bowl away,” said Stone of the Fed’s monetary policy.

Banks Find Promise Unfulfilled in China Forays

In June 2005, when Bank of America Corp.'s then-Chief Executive Ken Lewis flew to Beijing to sign a $3 billion pact to acquire a 9% stake in one of China's biggest state-run banks, he hailed the deal as "a long-term investment."

In Mr. Lewis's view, the money the bank put into China Construction Bank Corp. should have given the Charlotte, N.C., lender an entry into the world's fastest-growing economy and a clear shot at tens of millions of potential banking customers.

The Bank of America chief at the time was part of a parade of top international bankers who piled ...

Obama Warns Republicans on Debt Limit

WASHINGTON—The next phase in the bitter, two-year-long battle between the White House and congressional Republicans began in earnest Monday, with President Barack Obama and GOP leaders digging in over spending and the debt limit.

Mr. Obama, speaking at a hastily called news conference, sought to blunt any momentum gathering around congressional Republican plans to use the vote on raising the debt limit as leverage in coming budget fights, saying it is "irresponsible" and "absurd" to even consider defaulting on U.S. debt in an attempt to extract spending cuts from Democrats.

The president said the threat of default already is harming ...

Will Obama Ruin the Economy to Ruin the Republicans?

With both the 14th Amendment and platinum coin options to defuse a debt-limit crisis (apparently) off the table, only two possible outcomes are left: a debt- ceiling increase or the government's missing required payments and economic chaos ensuing. This is exactly the choice President Barack Obama laid out in his news conference this morning.
Politico reported today that top Republican staff members believe “more than half” their conference is prepared to push the government into default on some payments rather than cave on their demands for further spending cuts.
This isn’t because Republicans are reckless, as such. Many conservatives are sincerely convinced that excessive government spending poses a dire risk to the U.S. economy, and that even if missed payments have severe negative short-term economic consequences, they will be worth it if the long-term outcome is a smaller government.
The conviction that everything is about to come apart in the U.S. if the government maintains its current economic-policy course -- through tremendous inflation, a debt crisis, and/or all of the productive members of society Going Galt -- animates the huge Republican resistance to anything Obama proposes, even if that’s just the government paying the bills it has already run up. They’re trying their very hardest to save the country from a madman.
This sincere outlook is also insane, as you can see from how the stock and bond markets have behaved in recent years in response to various policy actions. The markets like fiscal expansion, monetary expansion and deals that keep the government operating as usual without drastic policy change. They do not cry out for massive disruption in pursuit of smaller government.
But the conservative worldview is robust because of its imperviousness to evidence. Economic data, like polling data or climate data, cannot get in the way of the narrative. Conservatives are sure that the Obama presidency will lead to an economic calamity, and they will prove it, if necessary.
Mike Konczal of the Roosevelt Institute has a good rundown of the game theoretical implications of the White House’s choices to take the coin and the 14th Amendment off the table. By removing the options to hit the debt ceiling without economic disaster, maybe the White House will force Republicans to give the White House the policy it most wants: a clean debt-ceiling increase. Or maybe we’ll hit the debt ceiling anyway.
But there is another explanation for the White House’s choice that is missing from Konczal’s analysis. If Obama had minted the coin, he would have taken the blame for whatever problems ensued, real or imagined. He might have saved the economy while bearing the political cost of ruining it. Foreclosing that option has an indeterminate impact on the economy, but it will ensure that Republicans get all the blame for whatever bad economic events happen in the next few months.
By creating an object lesson of how unfit the Republican Party has become to govern, Obama can ensure himself a political “win.” But with a new recession sparked by a government payments crisis, the country would lose -- and Obama, whose second-term plans would be hampered by the need to manage yet another recovery, would lose, too.
(Josh Barro is lead writer for the Ticker. E-mail him and follow him on Twitter.)
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