October 15, 2010 / 4:21 PM / 10 years ago

US STOCKS-Nasdaq rallies 1 pct on Google, banks weigh on Dow

* Foreclosure issue sinks banks for second straight day

* Google jumps after revs blow past estimates

* Bernanke speech points to more easing

* Dow off 0.4 pct, S&P up 0.1 pct, Nasdaq up 0.9 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to midday, changes byline)

By Ryan Vlastelica

NEW YORK, Oct 15 (Reuters) - A blowout quarter from Google lifted the Nasdaq almost 1 percent on Friday, while the Dow fell as concerns about the widening foreclosure crisis again hurt bank shares.

The S&P edged higher following the most heavily traded morning for the index in at least a month as investors digested mixed results from conglomerate GE and comments from Federal Reserve chairman Ben Bernanke that pointed to more monetary easing.

Financials declined on concerns the foreclosure quagmire could not only affect bank profits but spread to credit markets and the overall economy.

“The real downside potential of this issue is unknowable. It could be a multibillion dollar problem,” said Brian Battle, vice president of trading at the Chicago-based Performance Trust Capital Partners. “This could end up being a problem with the financial system like we saw in 2008.”

The KBW bank index .BKX dropped 2 percent, falling for the third straight day. JP Morgan Chase & Co (JPM.N) slid 3.1 percent to $37.52, while Bank of America Corp (BAC.N) hit a new 52-week low of $11.74 before easing to $12.06, off 4.3 percent. Trading volume on both Dow components eclipsed their 50-day averages.

Google Inc (GOOG.O) boosted the Nasdaq, surging 10.6 percent to $598.66 one day after net revenues surged 25 percent in the third quarter, blowing past estimates. The AMEX Interactive Week Internet index .IIX gained 1.4 percent. [ID:nN14187391]

“Google is one of the companies that, no matter what, it can get things done,” Battle said. “But investors need broad-based evidence that we’re seeing growth. And we didn’t get that from GE.”

General Electric Co (GE.N) fell 5.2 percent to $16.27 after revenues came in below estimates, even as profits from continuing operations increased for the second straight quarter and its Capital unit recorded a stronger performance. [ID:nN15165353]

The Dow Jones industrial average .DJI was down 41.44 points, or 0.37 percent, at 11,053.13. The Standard & Poor's 500 Index .SPX was up 0.08 points, or 0.01 percent, at 1,173.89. The Nasdaq Composite Index .IXIC added 22.24 points, or 0.91 percent, at 2,457.62.

The weakness in GE and financials erased initial gains that came after Bernanke said high unemployment and low inflation pointed to a need for further monetary easing. He said policymakers were still deciding how aggressive to be. [ID:nN15187998]

Markets have advanced in recent weeks, with the S&P 500 up 11.6 percent since Sept. 1. The expectation for further accommodative policies from the Fed has helped feed the rally.

Both Mattel Inc (MAT.O) and Gannett Co Inc (GCI.N) tumbled after their quarterly revenues missed expectations. Mattel dropped 7.3 percent to $22.24, while Gannett slumped 8.4 percent to $12.90. [ID:nN14136493] and [ID:nN15168181]

Charles Schwab Corp (SCHW.N) rose 2 percent to $14.37 after its quarterly profit topped estimates. [ID:nN15188685]

On the economic front, consumer prices edged up 0.1 percent in September, while retail sales rose more than expected. Separately, an early reading on October consumer sentiment unexpectedly weakened, according to a Thomson Reuters/University of Michigan survey. (Editing by Jeffrey Benkoe)

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