MENAFN - ProactiveInvestors - Australia
Why the Dow plunged 205 points
(MENAFN - ProactiveInvestors - Australia) U.S. stocks were heavily sold off overnight Friday as a raft of corporate earnings disappointed the market - in what was the 25th anniversary of the 1987 crash.
By the close the Dow Jones had slumped 205 points (-1.52%) to 13.344, while the NASDAQ plunged 67 points (-2.19%) to 3006.
Economic data and events in Europe were overshadowed by quarterly results from corporate heavy hitters, with Apple (NASDAQ:AAPL) shares weighing on the Nasdaq after a tech blog reported that US District Judge Lucy Koh denied Apple's request to seal many of the private documents that were central to its recent win against Samsung.
The company was ordered to release key financial information, according to AllThingsD blog.
McDonald's Corp (NYSE:MCD) shares fell 3.8% after the world's largest burger chain said third-quarter profit fell 3% to 1.46 billion, or 1.43 a share, from 1.51 billion, or 1.45 a share, in the year-ago period. Currency translations impacted the latest quarter's results by 8 cents a share.
Revenue fell to 7.15 billion from 7.17 billion. Wall Street analysts expected McDonald's to earn 1.47 a share on sales of about 7.17 billion.
Microsoft Corp (NASDAQ:MSFT) disappointed investors with its shares down almost 3% after the software giant reported lower-than-expected quarterly results. The company reported a 22 per cent decline in first-quarter revenue, on a slowdown in PC demand ahead of its Windows 8 launch.
General Electric (NYSE:GE) reported a third-quarter profit of 3.49 billion, or 33 cents a share, up from 3.22 billion, or 22 cents, in the same period a year earlier. Operating earnings were 36 cents per share, meeting estimates. Revenue of 36.35 billion missed Wall Street's expectations, however, as foreign exchange rates hurt revenue by around 1.1 billion.
Honeywell (NYSE:HON) said earnings rose 10 per cent in the third quarter, though revenue was almost flat from the prior year period. Margins improved, but the company cut its profit outlook for the full year.
Oilfield services provider Baker Hughes (NYSE:BHI) reported a sharp drop in its third-quarter earnings on Friday, despite a modest increase in revenues of three per cent, with results falling short of Street estimates on lower than expected activity in several key markets.
And Marvell Technology Group (NASDAQ:MRVL) has scaled back its third-quarter revenue guidance, citing a continued slowdown in the global economy and a soft PC market. The Hamilton, Bermuda-based chip maker saw its stock dive almost 14% Friday afternoon.
U.S. Economic News
On the economic front, existing home sales in September fell 1.7 per cent to a seasonally adjusted annual rate of 4.75 million, from a 7.8% rise the prior month.
The data from the National Association of Realtors was in line with expectations, with the report showing declines in all regions except the South.
Meanwhile, in Europe, the leaders of the 17-nation euro zone on Friday agreed on a timetable for their banking supervising body. The new system, to be headed by the European Central Bank, is expected to begin January 1, 2014 - a year later than planned - and will cover all 6,000 Euro-area banks. There are still no details of yet on how the bank losses should be shared.
Spain has still not requested any formal aid at the EU summitt underway, with the country seemingly waiting until EU leaders approve the banking supervision process.
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