Stocks Plunge on Black Monday's 25-Year Anniversary
NEW YORK (TheStreet) -- The major U.S. stock averages plunged Friday with investors spooked by a batch of high-profile earnings misses and the re-emergence of eurozone jitters.
Adding to the drama of the session, the drop came on the twenty-fifth anniversary of the Black Monday stock market crash.
Soft results from General Electric (GE) and McDonald's (MCD) this morning on the heels of shortfalls from tech bellwethers Google (GOOG) and Microsoft (MSFT) on Thursday stoked concerns about the potential for an even weaker performance in the fourth quarter.
The Dow Jones Industrial Average sank more than 205 points, or 1.52%, to close at 13,343.51. The blue-chip index was able to hold onto a slim 0.11% gain for the week and is up 9.2% in 2012.Twenty-nine of 30 components closed lower. The biggest blue-chip decliners were Caterpillar (CAT), Cisco (CSCO), GE, McDonald's, and Microsoft. Only Home Depot (HD) managed to gain ground. General Electric posted in-line third-quarter earnings of 36 cents a share, but revenue came in at $36.35 billion, falling short of analysts' expectations of $36.94 billion. The stock closed down 3.4% on the day. Shares of McDonald's finished with a 4.4% loss after the fast food giant posted a quarterly profit of $1.43 a share, below the consensus view for a profit of $1.47 a share, as the stronger dollar weighed on results abroad and the fast-food giant faced stiffer domestic competition. Microsoft's stock lost 2.9% after the software giant reported a year-over-year decline in operating income for its fiscal first quarter, citing slow PC demand ahead of its Windows 8 launch. After losing 8% on Thursday after its below-consensus earnings leaked early, Google shares were down another 1.9% on Friday. Investors were also assessing the scant developments that emerged from the second day of meetings between European Union leaders in Brussels, where issues surrounding more financial aid for Spain weren't addressed. Although they were in agreement of having a legal framework for a single euro banking supervisor formed by year end, the leaders did not lay out a clear start date. "In a celebrated instance of kicking the can down the road, the EU summit appears to have delayed any difficult decisions on the euro banking union until next year," Paul Donovan, global economist at UBS, commented. "A 'legal framework' is reportedly agreed, but the obstacles to overcome are more political than legal."
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