GE, McDonald's give Wall St. a black eye on 1987 crash date
By Atossa Araxia Abrahamian ,Reuters
October 21, 2012, 12:01 am TWN
NEW YORK -- U.S. stocks ended the week on Friday with their worst day since late June after Dow components General Electric and McDonald's, both barometers of the overall economy's health, added to a disappointing earnings season.
Technology shares kept up a pattern of recent weakness, hurt by anemic results from Microsoft and another losing day for Google. The Nasdaq closed down 2.2 percent.
For the Dow, Friday's slide marked its biggest loss since June 21 — with the sell-off coming on the 25th anniversary of Black Monday, when the Dow plunged 22.6 percent in its worst single-day percentage drop ever.
For the week, though, the Dow still managed to squeak out a gain of 0.1 percent, while the S&P 500 gained 0.3 percent despite Friday's losses.
Wall Street's mood was sour, given that a large number of companies have fallen short of top-line expectations. Of the 116 S&P 500 companies that have reported results so far, 58 percent have missed on revenue expectations, according to Thomson Reuters data.
"Traders are going to look at things that mimic the U.S. economy — and currently, everything that mimics the economy has been performing awfully," said Todd Schoenberger, managing principal at the BlackBay Group in New York.
General Electric Co. shares fell 3.4 percent to US$22.03 after quarterly revenue fell short of estimates.
McDonald's Corp. lost 4.5 percent to hit US$88.72. Chipotle Mexican Grill fell 15 percent to US$243 after quarterly profits missed analysts' expectations.
The technology sector has been a drag on the stock market, which is a concern because it is seen as a leading indicator of market direction. The S&P information technology sector index has dropped 5.3 percent in the last 10 days, compared with a 1.9 percent decline for the S&P 500 in that time period.
"Tech has been lagging for almost a month now. It is obviously very sensitive to the U.S. economy, and the global economy for that matter," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.