Wall Street went on the slide yesterday after lacklustre figures from Bank of America (BoA) and General Electric (GE), two of America’s biggest companies, reminded investors of the troubles still hitting US households.

A surprisingly large fall in consumer confidence in October also helped to erode the optimism about the third-quarter earnings season, which on Wednesday pushed the Dow Jones industrial average above the 10,000-point milestone.

By lunchtime yesterday the Dow had shed 100 points, or 1 per cent, to 9,957.35 points, while the Nasdaq dropped by 1.3 per cent and the S&P 500 was down by 1.1 per cent.

Analysts said that JPMorgan Chase had inflated expectations that the economy was healing when the bank reported strong third-quarter results on Wednesday, only to see these hopes dashed yesterday when BoA reported a third-quarter net loss of $1 billion (£612 million), down from a $1.1 billion profit in the same period last year.

Meanwhile, GE reported a $2.5 billion net profit, down 42 per cent year-on-year after plunging earnings at its finance division.

Dirk van Dijk, chief equity strategist at Zacks.com, said: “People started getting really giddy after JPMorgan and Intel, then all of a sudden it was like, ‘hello, we still have the credit issue out there!’ Consumer sentiment was disappointing, so that also played a role.”

Kenneth Lewis, outgoing chief executive of BoA, echoed a warning made by Citigroup on Thursday when he described bad debts as the biggest difficulty facing the bank, forcing BoA to write down loans worth almost $10 billion in the three months to September 30. Mr Lewis said that there were early positive signs, such as a flattening of the numbers of people failing to pay their credit card debts, but investors focused on the $1 billion loss at BoA’s global credit card division.

There were other indicators of domestic difficulties, including a 40 per cent drop in net income from deposits to $798 million and a $1.6 billion loss in home loans. Insurance made a $1.6 billion loss.

BoA’s first quarterly loss since the fourth quarter last year came despite a 32.6 per cent year-on-year increase in revenue to $26 billion. The loss, which included hits from non-core items such as a $402 million charge to close down a government guarantee facility, widens to $2.2 billion with the $1.2 billion bill for preference dividends.

Net profit at GE’s finance division fell 87 per cent to $263 million in the third quarter, although Jeffrey Immelt, chairman and chief executive, said that every segment of GE Capital except real estate was now profitable.

The University of Michigan Consumer Sentiment Index further dampened investors’ spirits when it slipped to 69.4 points in October, down from 73.5. The consensus estimate for October had been 73.3 points.

Analysts said the index indicated that consumption was unlikely to accelerate in the holiday season as it usually did.

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