Bank of America Corp, the second-largest U.S. bank, posted a much larger-than-expected 32 percent drop in quarterly profit on Thursday, hurt by mounting credit losses and dismal investment banking results.
The news, the latest in a series of disappointing bank results, dampened confidence about the health of the U.S. consumer and the economy. Stocks fell, bond prices rose, and the dollar tumbled to a record low against the euro. Expectations rose that the Federal Reserve will cut interest rates this month.
"We knew the credit situation was going to be bad, but this was worse than expected," said Michael Mullaney, who helps invest $10 billion at Fiduciary Trust Co. in Boston and owns the bank's shares.