Market Recap: Weak Earnings Send Markets Scurrying
Markets closed down today:
▼ Dow: -1.52 percent
▼ Nasdaq: -2.19 percent
▼ S&P: -1.66 percent
▼ Gold: -1.08 percent to $1,721.32 an ounce
▼ Silver: -2.00 percent to settle at $32.04
▼ Oil: -2.14 percent
Markets were down because:
Poor corporate earnings reports pounded the stock market Friday in a sour end to an otherwise strong week of trading. The Dow Jones industrial average fell more than 200 points for its worst day in four months.
Disappointing results from three giants of the Dow – Microsoft, General Electric and McDonald’s – were partly to blame. The Standard & Poor’s 500 index fared even worse, as widespread worries about companies’ ability to keep churning out better profits drove the broader market down.
Through Thursday, with 115 companies in the S&P 500 reporting, earnings have dropped 3.7 percent compared with a year earlier, according to Thomson Reuters, a financial data provider, and ING, a financial company.
Heading into this earnings season, financial analysts had estimated that corporate profits for July through September would fall compared with the same period a year ago. That would be the first such decline in three years.
The Dow sank 205.43 points, or 1.5 percent, to close Friday at 13,343.51.
The S&P lost 24.15, or 1.7 percent, to 1,433.19. The Nasdaq composite index, hammered by a second ugly day for Google, lost 67.25 points to 3,005.62, a 2.2 percent decline.
The big drops Friday left the Dow and S&P clinging to gains for the week.
All 10 industry groups in the S&P 500 fell, led by technology and materials stocks.
Google continued its slump, losing $13.21 to $681.79, a day after its earnings report was accidently hours ahead of schedule. The report raised questions for Google and other Internet companies about ads that target mobile devices.
It’s been a tough week for technology companies. IBM pointed to Europe’s troubles and slowing business spending when it posted weaker revenue than analysts expected. Intel, the world’s largest maker of computer chips, blamed the global economy and sliding computer sales for pushing net income down.
The bad news kept piling up Friday. Sagging PC sales and trouble in Europe took a toll on Microsoft’s net income. Its stock lost 86 cents, or 3 percent, to $28.64. Marvell Technology Group and Advanced Micro Devices, which also make chips, sank sharply.
McDonald’s profit shrank as a strong dollar hurt international results, which account for two-thirds of its business. The fast-food giant’s stock lost $4.14, more than 4 percent, to $88.72.
General Electric, a bellwether of the economy, fell 3 percent. The company reported stronger profits early Friday, but its revenue missed Wall Street’s expectations.
Orders for new equipment and services sank, mainly because wind turbine orders have fallen because a key U.S. federal subsidy for wind power expires at the end of the year. GE’s stock lost 78 cents to $22.03.
As corporate earnings roll in, banks and so-called consumer discretionary companies, which include luxury stores and hotels, are projected to report the best growth.
Analysts expect companies dealing in metals and other materials to report the worst results, followed by energy companies. But it’s technology companies like IBM, Intel and Google whose results have grabbed the most attention.
The losses left the Dow up just 0.1 percent for the week. The S&P was up 0.3 percent, and the Nasdaq was down 1.3 percent.
As investors sold stocks, they bought U.S. government bonds, driving prices up and yields down. The yield on the benchmark 10-year Treasury note slipped to 1.77 percent from 1.83 percent late Thursday.
The disappointing earnings and a report showing a drop in home sales last month also pushed energy prices lower. The price of oil fell 2.2 percent on the New York Mercantile Exchange. Benchmark crude lost $2.05 to end at $90.05 per barrel.
The Associated Press contributed to this report.
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