Benchmarks took a battering on Friday as three industry
heavyweights, Microsoft, General Electric and McDonald's, came
out with discouraging economic reports. The Dow suffered its
biggest fall in almost four months. Also, weekly gains were
almost overshadowed by the heavy losses benchmarks suffered on
Friday alone. Metals lost their sheen as copper and gold prices
The Dow Jones Industrial Average (DJI) crashed 20.5.43 points
or 1.5% to end at 13,343.51. The Standard & Poor 500 (S&P
500) slumped 1.7% to end Friday's trading session at 1,433.19.
The tech-laden Nasdaq Composite Index plunged 2.2% to close 67.25
points lower at 3,005.62. The fear-gauge CBOE Volatility Index
gained 2.0% to settle at 17.06. Total volumes on the New York
Stock Exchange were 3.3 billion shares. Declining stocks
outnumbered advancers on the NYSE by a wide margin; as for 74%
stocks that declined, 22% stocks closed higher.
The day was dominated by corporate results and the major ones
disappointed. Earnings results almost single-handedly took the
markets lower and the Dow suffered its biggest decline since
June. Also, in terms of points, it was the Dow's fourth worst
show this year. Incidentally, it was the 25
anniversary of Black Monday, when on October, 19, 1987, the
blue-chip index had lost 22%.
Coming to the details of the corporate results, Microsoft
), McDonald's Corporation (NYSE:
) and General Electric Company (NYSE:
) reported discouraging results and almost all of them blamed
certain macroeconomic headwinds. Shares of Microsoft, McDonald's
and General Electric lost 2.9%, 4.5% and 3.4%, respectively.
While the PC market slowdown was one of the factors that
affected Microsoft, dull comparable-store sales and inflated
costs affected McDonald's. Currency translation headwinds were
also a reason behind McDonald's poor third quarter. Microsoft
fell short of the Street's estimates on both counts, but
McDonald's moved past top line estimates and missed earnings
expectations. As for General Electric, a decline in orders for
wind turbines resulted in a 5% drop in infrastructure orders.
However, General Electric's bottom line was in line with
estimates, while revenues fell short of projections.
Advanced Micro Devices, Inc. (NYSE:
) announced late on Thursday that its revenue slumped 10.2%
sequentially and 24.9% year over year. AMD's shares slumped
16.8%, adding to the woes of the tech sector.
The disappointing corporate results came hot on the heels of
weak numbers reported by Google Inc. (NASDAQ:
). Shares of the world's leading internet search engine had
slumped 10.5% during Thursday's session and trading was briefly
halted. At the end of the trading day, Google's shares were down
8% and closed at $695.00 per share. Weakness in the core internet
advertising business and continual losses from its recently
acquired cell phone business, Motorola Mobility, were the major
factors behind Google's third-quarter loss.
Earlier, Intel Corporation (NASDAQ:
) and International Business Machines Corp. (NYSE:
) had also reported weak numbers. Shares of all the three
aforementioned companies slumped on Friday while the Technology
Select Sector SPDR (XLK) dropped 2.2%. Shares of Google, Intel
and IBM dropped 1.9%, 1.9% and 0.8%, respectively. Separately,
shares of Hewlett-Packard Company (NYSE:
), Apple Inc. (NASDAQ:
), NVIDIA Corporation (NASDAQ:
) and Texas Instruments Incorporated (NASDAQ:
) plunged 2.2%, 3.6%, 5.9% and 3.3%, respectively.
Meanwhile, metal prices fell considerably on Friday. While
copper plunged 3% to settle at $3.6375 a pound, gold was down by
$20.70 to $1,724 per ounce. Also, energy prices dropped with
benchmark crude losing $2.05 to settle at $90.05 per barrel. The
Energy Select Sector SPDR (ETF) was down 1.6% and stocks
including Chevron Corporation (NYSE:
), Exxon Mobil Corporation (NYSE:
), TOTAL S.A. (ADR) (NYSE:
) and Western Refining, Inc. (NYSE:
) lost 1.1%, 1.4%, 1.2% and 2.5%, respectively.
APPLE INC (AAPL): Free Stock Analysis Report
ADV MICRO DEV (AMD): Free Stock Analysis
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INTEL CORP (INTC): Free Stock Analysis Report
MCDONALDS CORP (MCD): Free Stock Analysis
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NVIDIA CORP (NVDA): Free Stock Analysis
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