It was too much to ask. The Pollyannas on Wall Street looking for silver linings in every poor result finally gave up as a trio of poor after-hours reports (by analysts’ standards) tipped US market indexes lower following two days that saw more than 480 points of gains on the Dow.

Google and Microsoft made solid profits, but missed market estimates and provided mixed outlooks. IBM beat market estimates and raised its forecasts, but Merrill Lynch was the final nail with much worse than expected $US4.6 billion loss on huge write-downs of around $US9 billion and assets sales raising $US8 billion.

With Citigroup expected to report another loss tonight, investors are wondering about their purchases of the past two days and whether they might be a bit expensive. Here’s a recap of last night’s action.

The Dow was up 207 points in regular trading Thursday, after Wednesday’s 277 point gain, but it tumbled in after-hours trading and set up a nervy night tonight with jittery banking giant, Citigroup, now expected to report another big loss.

Oil prices fell as China slowed and US natural gas stocks jumped unexpectedly, but it was what happened to gas prices in the US markets that pulled oil lower: gas prices fell more than 7% in a major surprise and that pulled oil prices lower with the current New York contract price tumbling to close at $US129.29, 11% down on the peak of more than $US147 a barrel reached last week. That’s the biggest fall since late 2004.

The US housing recession, now in its third year, will run into a fourth if the latest new home starts numbers are any guide with the construction of single-family homes hitting a 17% year low last month, although a change in New York laws helped give a big boost to apartment building. The US Commerce Department said construction of single-family homes dropped 5.3% in June to a seasonally adjusted annual rate of 647,000 units, the weakest performance since January 1991.

But construction of multi-family units surged 42.5% last month, thanks to a change in New York City building codes that pulled forward a lot of project starts: taken together, single and apartment construction rose by 9.1% to an annual rate of 1.066 million units, but that’s was a one-off. Investors ignored the news completely in their desperation to load up on airlines, financial shares and other stocks sold off in recent weeks: such is the power of the rose-tinted investment spectacles.

China’s economic expansion “slowed” to the slowest pace since 2005 as gross domestic product grew 10.1% in the June quarter, compared to 10.6% in the March quarter and 11.9% for all of 2007.

Google’s slowing earnings growth was (with the big Merrill Lynch loss) the big after hours story as the market took that 35% rise in earnings to $US1.5 billion in the quarter on the same quarter of last year, a sign of slowing ad sales and consumer interest.

Merrill Lynch booked its fourth-straight quarterly loss Thursday, with the $US4.6 billion loss taking the losses of the last four successive quarters to a mind numbing $US19.2 billion. The latest quarterly loss was more than double the estimate from the market.

Both JPMorgan Chase , which reported earlier in the day, and regional bank Wells Fargo saw their profits plunge during the quarter, but still managed to stay ahead of Wall Street’s expectations. That news has helped drive the rebound in Wall Street. Merrill shares lost 9% after hours, nearly wiping out the stock’s 10% gain in regular trading, Google fell 12%, and Microsoft shares were off 6% after earnings came in short of expectations and the company cut its estimate for the next quarter to below analysts’ forecasts.

IBM’s second quarter profit leaped 22%, easily beating estimates and its outlook improved. The shares rose, but not enough to offset the impact of the huge Merrill loss and the less than expected earnings results from Google and Microsoft.