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 and was headed for its worst day in four months.
Disappointing results from three giants of the Dow ? Microsoft, General Electric and McDonald's ? 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 221 points, or 1.6 percent, to 13,327. The S&P was down 26, or 1.8 percent, at 1,431. The Nasdaq composite index, hammered by a second ugly day for Google, lost 70 points to 3,002, a 2.3 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, a financial data provider, and 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 materials and technology stocks. For a time Home Depot and Bank of America 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 $16.70 to $678.30, a day after it accidently released its earnings report 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 piled up Friday. Sagging PC sales and trouble in Europe took a toll on Microsoft's net income. Its stock lost 89 cents, or 3 percent, to $28.60. 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 $3.51, more than 4 percent, to $89.35.
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 60 cents to $22.21.
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.
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.
Among other stocks making big moves:
? Chipotle Mexican Grill plunged 14 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 $41.32 to $244.61.
? Capital One Financial 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 U.S. credit-card division helped propel loan revenue. Capital One's stock gained $3.30 to $60.60.
? Advanced Micro Devices, the world's second-largest maker of microprocessors, plunged 14 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 28 cents to $2.25.
Associated Pressforgetting sarah marshall taraji p. henson irs shuttle discovery biggest loser bonnie raitt internal revenue service
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.