Why the Dow Is Down on Its 25th Crash-iversary
Oct 19th 2012 11:02AM
Updated Oct 19th 2012 11:14AM
Twenty-five years ago today, the Dow Jones Industrials (INDEX: ^DJI) suffered its worst one-day percentage loss in its illustrious history. As Fool contributor Alex Planes will look at in more detail later this hour, the "Crash of the Century" was unprecedented in its ferocity and prompted numerous changes to try to stave off future crashes. But even though stocks aren't crashing today, they're definitely not celebrating, either, as the Dow was down more than 100 points at 10:45 a.m. EDT.
Earnings continue to be a big driver of moves among Dow stocks. Last night, Microsoft (NAS: MSFT) reported earnings that came in well below expectations. Revenue dropped 8%, and a 22% plunge in net income partially reflected an anticipated slowdown before the release of the Windows 8 operating system. But as we saw with Intel's (NAS: INTC) earnings disappointment earlier in the week, PC sales have slowed, and if that trend continues, it won't matter what operating system is on a product that no one's buying. Investors apparently agree: The shares are down more than 2% in early trade.
General Electric (NYS: GE) fell even more sharply, down about 2.5% after matching earnings expectations but falling short on the top line. GE still believes it can grow earnings for the full year by double-digit percentages, but the company is suffering from adverse currency effects and doesn't believe economic conditions will improve in 2013.
Finally, McDonald's (NYS: MCD) topped the losers' list with a 3% drop after its own disappointing quarterly report. Weak revenue growth was the primary culprit, with same-store sales rising 1.9% -- the slowest rate since mid-2003. As with GE, a strong dollar hurt results, and analysts expect that tougher year-over-year comparisons will make it harder for McDonald's to sustain growth.
Why PCs are so important for the Dow
With so many tech stocks feeling the impact of slowing PC sales, it's important to follow technology trends. With Microsoft, which has failed to capitalize on the incredible growth in mobile over the past decade, the release of its own tablet, along with the widely anticipated Windows 8 operating system, could finally help it turn the corner. Find out whether Microsoft is a buy in our premium report on the software giant, in which our analyst gives a detailed explanation of the company's prospects. He's also providing regular updates as key events occur, so be sure to claim a copy of this report now by clicking here.
The article Why the Dow Is Down on Its 25th Crash-iversary originally appeared on Fool.com.Fool contributor Dan Caplinger has no positions in the stocks mentioned above. The Motley Fool owns shares of General Electric, Intel, McDonald's, and Microsoft. Motley Fool newsletter services recommend Intel, McDonald's, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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