Weak Earnings Give Dow Worst Day in 4 Months

New York Stock ExchangeBy MATTHEW CRAFT, AP Business Writer

NEW YORK (AP) - 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 (MSFT), General Electric (GE) and McDonald's (MCD) - were to blame. But the broader market fell, too, and the Standard & Poor's 500 index fared even worse in percentage terms.

The Dow sank 205.43 points, or 1.5 percent, to close 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 (GOOG), 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.

Financial analysts expect corporate earnings for July through September to be lower than the same period a year ago, which would be the first yearly decline in three years.

Through Thursday, with 115 companies in the S&P 500 reporting, earnings were down 3.7 percent compared with a year earlier, according to Thomson Reuters (TRI), a financial data provider, and ING (ING), a financial company.

"And once you get one quarter of negative earnings, it's a precursor," said Doug Cote, chief market strategist at ING Investment Management in New York. "It's the cockroach theory: If you find one, there's probably many more."

All 10 industry groups in the S&P 500 fell, led by technology and materials stocks. For a time Home Depot (HD) and Bank of America (BAC) were the only stocks in the Dow trading higher for the day, but by 3 p.m. they were lower, too.

Google continued its slump, losing $13.21 to $681.79, a day after its earnings report was accidentally released 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 (IBM) pointed to Europe's troubles and slowing business spending when it posted weaker revenue than analysts expected. Intel (INTC), the world's largest maker of computer chips, blamed the global economy and sliding computer sales for pushing net income down.

The bad news piled 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 (MRVL) and Advanced Micro Devices (AMD), 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.

Among other stocks making big moves:

- Chipotle Mexican Grill (CMG) plunged 15 percent after the burrito chain forecast that revenue growth would slow sharply next year. The stock had been a favorite among investors thanks to super-fast growth in recent years. The stock fell $42.93 to $243.

- Capital One Financial (COF) surged 6 percent, making it the top performer in the S&P 500. Capital One's quarterly results, reported late Thursday, easily trumped analysts' estimates as profits jumped 47 percent. The lender's purchase of both the online bank ING Direct and HSBC's (HBC) U.S. credit-card division helped propel loan revenue. Capital One's stock gained $3.45 to $60.75.

- Advanced Micro Devices, the world's second-largest maker of microprocessors behind Intel, plunged 17 percent. AMD said late Thursday that sales of its chips have dwindled as buyers shift away from personal computers in favor of tablets and smartphones. It also plans to cut 15 percent of its workforce. AMD lost 44 cents to $2.18.



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206 Comments

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Condley

The best Christmas gift will be a sack of money under the mattress.

October 21 2012 at 10:57 PM Report abuse rate up rate down Reply
democracks0

boehnerisababy
Todd Akin Likens Claire McCaskill To 'One Of Those Dogs,' Fetching Taxes, Bureaucracy

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boehnerisababy
Not only did Bush spend more days on vacation than any other president, but he used Air Force One more often while on vacation than any other president.

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More liberal BS from a copying and pasting freeloading dopey simple minded Obamite.

October 21 2012 at 9:46 PM Report abuse +1 rate up rate down Reply
democracks0

boehnerisababy
Todd Akin Likens Claire McCaskill To 'One Of Those Dogs,' Fetching Taxes, Bureaucracy

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More copy and paste dog dung from the anals of Moveon.org.

What a simple minded dopey Obamite.

October 21 2012 at 9:42 PM Report abuse +1 rate up rate down Reply
democracks0

boehnerisababy
THE GOP DOESN'T WANT YOU TO HAVE A JOB, WHY ELSE DO THEY KEEP BLOCKING THEM?
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I didn't know Harry Reid is a Republican? Harry Reid even blocked Obamas job bill. Over the hill Harry has go to go. He's such an obstructionist you simple minded dopey Obamite.

October 21 2012 at 9:40 PM Report abuse +1 rate up rate down Reply
democracks0

boehnerisababy
Fox and snobs was stunned when Ben Stein said ,we need to raise taxes on the rich........LOL!!!!!!!!

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The simple minded Obamite thinks that everything said on Fox News is gospel and Fox News rules the world.

What a dope

October 21 2012 at 9:35 PM Report abuse +2 rate up rate down Reply
1 reply to democracks0's comment
democracks0

Anyway who gives a cr@p what Ben Stein says. You simple minded dopey Obamite

October 21 2012 at 9:36 PM Report abuse +2 rate up rate down Reply
democracks0

boehnerisababy
Fox looks stunned when one of their own says we should tax rich people
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We should tax rich people? Who is we? We = a bunch of freeloading mooching Obamites

October 21 2012 at 9:33 PM Report abuse +2 rate up rate down Reply
democracks0

boehnerisababy
HOW COME MITT IS A FLIP FLOPPER?
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Obama could hold classes on flip flopping. You simple minded dopey Obamite

October 21 2012 at 9:29 PM Report abuse +1 rate up rate down Reply
wheresmyfreemoney

EVAN DON'T FORGET TO LOOK UNDER YOUR BED FOR GLENN BACKKK .........LMAO SIMPLTON . NITE CAMEL STROKER.

October 21 2012 at 9:25 PM Report abuse +1 rate up rate down Reply
wheresmyfreemoney

EVAN ISN'T IT TIME YOU GO TUCK YOUR CAMEL IN ? STROKE HIM NICE NOW ! ...........SIMP

October 21 2012 at 9:23 PM Report abuse +2 rate up rate down Reply
wheresmyfreemoney

EVAN THINKS THE GOVERNMENT CREATES JOBS........WHAT A SIMP ! ........HE EVEN FELL FOR THE SHOVEL READY LIE ........ROTFLMMFAO

October 21 2012 at 9:21 PM Report abuse -1 rate up rate down Reply