Despite fluctuating in morning trading, U.S. stocks and exchange traded funds (ETFs) ended the morning in positive territory on hazy earnings reports causing many investors to be wary about the overall economy.

It was a busy day for earnings reports and the following affected the markets:

  • Bank of New York Mellon (BK) reported a first quarter earnings report that fell short of expectations, sending profits down 57% and forcing the bank to slash dividends to raise capital. The custodial bank reported earnings of $0.53/share as compared to analysts’ expectations of $0.63/share.
  • Construction giant Caterpillar (CAT) posted better-than-expected earnings, but stated the future doesn’t look as promising and reduced its forecast. The company reported a loss of $0.19/share as compared to analysts’ expectations of income of $0.04/share.  For 2009, CAT expects to earn $1.25/share down from its earlier forecast of $2.50/share.
  • Merck (MRK) reported a drop in earnings because of a decline in sales of its drugs and income from its partnership on cholesterol medicines.  The company earned $0.74/share as compared to analysts’ expectations of $0.78 share and cut its 2009 revenue forecast.
  • US Bancorp (USB) was able to beat analyst’s expectations despite losses tied to loans and securities.  The bank reported first-quarter earnings of $0.24/share as compared to expectations of $0.20/share
  • Chemical giant DuPont (DD) reported earnings of $0.54/share beating analyst expectations of $0.53/share but painted a bleak future for the remaining of 2009.
  • Coca Cola (KO) was able to meet analysts’ expectations by reporting earnings of $0.65/share.  As for the future, the company is confident it will meet its goals because it’s focusing on its core values and keeping costs down.
  • Airline giant Delta (DAL) reported a loss of $0.19/share for the first quarter of 2009.  This loss includes the costs incurred with its merger with Northwest Airlines; if these costs are excluded, the airline actually would have posted income of $0.84/share.

On a positive note, Treasury Secretary Timothy Geithner told a congressional panel that most U.S. banks have more capital than needed.  Additionally, he stated that there are signs of thawing in credit markets and some indication that confidence is beginning to return. Geithner suggested that the TARP program has enough money for further bank rescues, reports Rebecca Christie of Bloomberg.

This news sent the financials in positive territory.  The Financial Select SPDR (XLF) was up about 3% in intraday trading.

Geithner’s news seems to have overshadowed the negativity fired off by a report by the International Monetary Fund.  The IMF said that worldwide financial institutions could potentially suffer more than $4 trillion in losses, with the United States accounting for $2.7 trillion of it.  Additionally, the IMF says that the financial system remains under severe stress as the economic crisis broadens and takes its toll on consumers and businesses, states Martin Crutsinger of the Associated Press.

The Dow Jones Industrial Average was up about 1%, the S&P 500 gained nearly 1.2% and the Nasdaq jumped about 1.6%.

Kevin Grewal contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.