Better-than-expected second quarter earnings from the financial and technology sectors somehow can’t keep stocks and exchange traded funds (ETFs) afloat in morning trading.

Bank of America (BAC) and Citigroup (C) are the latest financial giants to report earnings and beat Wall Street’s expectations.  Bank of America reported earnings of $0.33/share, much higher that the $0.28/share forecast by analysts, driven primarily from its profits from its trading operations.  The nation’s largest consumer bank said that it is still concerned about the weakness in the economy, rising unemployment and deteriorating credit quality which will effect the company’s performance for the rest of the year.

Citigroup reported earnings of a $0.49/share and surprised Wall Street who expected the company to post a loss of $0.37/share. The outperformance was driven by a gain in the sale of its Smith Barney unit and not from improved trading operations like the other major banks.  The Financial Select Sector SPDR (XLF) was down nearly 1% in morning trading.

Conglomerate General Electric (GE) proved that the recession has taken a toll.  The Dow component reported a decline in second-quarter profits by 49%, but still beat Wall Street’s expectations.  GE reported income of $0.24/share as compared to the $0.23/share forecast by analysts. Out of all of GE’s units, the only one to post an increase in second-quarter profits was its infrastructure segment, driven by large stimulus packages.  Despite the outperformance, the news sent the Industrial Select Sector SPDR (XLI) down nearly 1.2% in morning trading.

In the technology sector, search engine giant Google (GOOG) reported profits that topped forecasts.  Google reported earnings of $5.36/share, higher than the $5.08/share that analysts expected. The news didn’t impact the industry as the Technology Select Sector SPDR (XLK) down 0.3% in intraday trading.

June housing construction rose to its highest level in seven months as builders rushed to pour foundations to enable first-time home-buyers to take advantage of tax credits.  Additionally, the Commerce Department reported that construction of new homes and apartments jumped 3.6% last month.  These numbers are all better than expected and are a sign that the economy may be in recovery mode.  The news sent the SPDR S&P Homebuilders (XHB) up about 2% in intraday trading.

Overall, all three major U.S. indexes are down this morning.  The Dow Jones Industrial Average declined nearly 0.1%, the S&P 500 dropped 0.4% and the Nasdaq fell 0.4%.

For more stories on financials, visit our financial category.

Kevin Grewal contributed to this article.

Tags: Dow Jones Industrial Average, Financial, Homebuilders, Industrials, NASDAQ, S&P 500, Sector ETFs, Technology, XHB, XLF, XLI, XLK