GE, McDonald’s give Wall Street a black eye on ’87 crash date | Pakistan Today

GE, McDonald’s give Wall Street a black eye on ’87 crash date

Technology shares kept up a pattern of recent weakness, hurt by anemic results from Microsoft (MSFT.O) and another losing day for Google (GOOG.O). 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 (GE.N) shares fell 3.4 percent to $22.03 after quarterly revenue fell short of estimates.
McDonald’s Corp (MCD.N) lost 4.5 percent to hit $88.72. Chipotle Mexican Grill (CMG.N) fell 15 percent to $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 .GSPT 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. Microsoft (MSFT.O) dropped 2.9 percent to close at $28.64 after it said it fell short of revenue expectations because of poor sales of PCs.
“The fact they are missing consistently is bringing up a ‘sell first, ask questions later’ mentality,” Detrick said.
Tepid results are being met with particular disappointment because expectations were low to begin with this season, with 95 negative pre-announcements for earnings per share and only 24 positive pre-announcements issued by S&P 500 corporations, Thomson Reuters data shows. Earnings are expected to drop 1.8 percent in the third quarter from a year ago.
The Dow Jones industrial average .DJI lost 205.43 points, or 1.52 percent, to close at 13,343.51. The Standard & Poor’s 500 Index .SPX fell 24.15 points, or 1.66 percent, to 1,433.19. The Nasdaq Composite Index .IXIC slid 67.24 points, or 2.19 percent, to close at 3,005.62.
For the week, the Nasdaq lost 1.3 percent.
The sharp decline took the S&P 500 from within striking distance of its highest close of the year – at 1,465.77 set on September 14 – to testing its 50-day moving average. On Friday, the S&P 500 appeared to be testing its 50-day moving average at around 1,433. If the S&P 500 falls below that level, it could trigger more selling.
“The S&P 500 has broken trend-line support at 1,441, and is slipping a bit below its 50-day moving average of 1,433,” said Stifel Nicolaus option market strategist Elliot Spar. Near-term volatility is expected to rise. The CBOE Volatility Index .VIX, Wall Street’s gauge of investor anxiety, rose 13.5 percent to close at 17.06, off its session high at 17.60. Options expiration added a bit of volatility to Friday’s trading. Volume was roughly 7.27 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the year-to-date average daily closing volume of 6.52 billion. Decliners outnumbered advancers on the NYSE by a ratio of more than 3 to 1. On the Nasdaq, about four stocks fell for every one that rose.

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