Stocks moved sharply lower over the course of the trading day on Friday, as traders reacted negatively to the latest batch of earnings news. The markets experienced broad based selling pressure, offsetting the strength that was seen earlier in the week.
The major averages regained some ground in the final hour of trading but still ended the day firmly in negative territory. The Dow tumbled 205.43 points or 1.5 percent to 13,343.51, the Nasdaq plummeted 67.25 points or 2.2 percent to 3,005.62 and the S&P 500 plunged 24.15 points or 1.7 percent to 1,433.19.
For the week, the tech-heavy Nasdaq showed a notable drop, falling by 1.3 percent. Meanwhile, the Dow and the S&P 500 closed nearly flat, edging up by 0.1 percent and 0.3 percent, respectively.
The sell-off on Wall Street came on the heels of disappointing quarterly results from big-name companies such as Microsoft (MSFT), General Electric (GE), and McDonald's (MCD).
After the close of trading on Thursday, Microsoft reported fiscal first quarter earnings that fell year-over-year due in part to the deferral of some revenue related to the upcoming release of its Windows 8 operating system. The software giant also reported revenues that fell by more than expected.
Shares of Microsoft are dropped by 2.9 percent on the heels of the news, ending the session at a four-month closing low.
Diversified conglomerate General Electric reported adjusted earnings that came in line with analyst estimates but on weaker than expected revenue growth. GE also provided disappointing full-year revenue guidance. Shares of GE fell by 3.4 percent on the day.
McDonald's reported third quarter earnings that fell year-over-year and came in below analyst estimates. The fast food giant also reported weaker than expected sales. Shares of McDonald's slid by 4.5 percent.
Adding to the negative sentiment, the National Association of Realtors released a report showing a drop in existing home sales in September, with sales pulling back off the two-year high set in the previous month.
NAR said existing home sales fell 1.7 percent to a seasonally adjusted annual rate of 4.75 million in September from an upwardly revised 4.83 million in August. With the drop, the annual rate matched the expectations of economists.
Biotechnology stocks moved substantially lower over the course of the trading day, dragging the NYSE Arca Biotechnology Index down by 3.1 percent. With the loss, the index ended the session at its lowest closing level in over a month.
Considerable weakness was also visible among semiconductor stocks, as reflected by the 3 percent loss posted by the Philadelphia Semiconductor Index. Advanced Micro Devices (AMD) and Marvell Technology (MRVL) turned in two of the sector's worst performances.
AMD plummeted by 16.8 percent after reporting a third quarter loss compared to a year-ago profit, while Marvell Technology tumbled by 14.3 percent after lowering its third quarter revenue outlook and announcing the resignation of its CFO.
Brokerage stocks also fell sharply on the day, resulting in a 2.8 percent drop by the NYSE Arca Broker/Dealer Index. E*Trade (ETFC) helped to lead the sector lower, falling by 9 percent after reporting an unexpected third quarter loss.
Reflecting the broad based selling pressure, most of the other major sectors also moved to the downside on the day. Networking, steel, chemical, and healthcare stocks posted notable losses.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. While Japan's Nikkei 225 Index and Hong Kong's Hang Index both inched up by 0.2 percent, China's Shanghai Composite Index edged down by 0.2 percent.
Meanwhile, the major European markets all moved to the downside on the day. The U.K.'s FTSE 100 Index dipped by 0.4 percent, while the German DAX Index and the French CAC 40 Index fell by 0.8 percent and 0.9 percent, respectively.
In the bond market, treasuries showed a strong move back to the upside after coming under pressure in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.8 basis points to 1.768 percent.
Earnings news is likely to remain in focus next week, with Apple (AAPL), AT&T (T), Procter & Gamble (PG), and Merck (MRK) among the slew of companies scheduled to release their quarterly results.
Traders are also likely to keep a close eye on the Federal Reserve, with the central bank due to hold a two-day monetary policy meeting ending next Wednesday.
The meeting is not expected to result in any major announcements following last month's decision to launch a third round of quantitative easing, but trading could still be impacted by the Fed's statement.
Several key economic reports are also scheduled to be released next week, including the Commerce Department's initial report on U.S. GDP in the third quarter.
by RTT Staff Writer
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