Dow Watch: Disney Drop

(At 4:32 p.m. EDT)

NEW YORK ( TheStreet) -- Dow earnings have gotten the bulls running, but a mouse could spell trouble for the blue-chip average tomorrow.

Disney ( DIS) reported fiscal third-quarter earnings of 52 cents a share, a penny better than Wall Street's consensus, according to Thomson Reuters, but down from a year earlier. Revenue slid 7% from a year ago to $8.6 billion, short of the $8.8 billion analysts expected.

Not surprisingly, the House of Mouse said the latest quarter was impacted by weak advertising sales at its television stations. After a 1.3% rise Thursday, Disney shares dropped 2% in the after-hours session following the report's release.

Earnings news most likely won't get better Friday. Chevron ( CVX) will become the last of five components of the Dow to report earnings this week, with analysts looking for a second-quarter profit of 95 cents a share on revenue of $33.41 billion, according to Thomson Reuters. That would be down from year-ago earnings of $2.90 a share on revenue of $82.99 billion.

Of course, energy companies didn't have a good run in the last quarter as crude oil prices have plummeted. Take Exxon Mobil ( XOM), which Friday reported a 66% tumble in second-quarter profit. Earlier in the week, ConocoPhillips ( COP) reported an even worse 76% drop in profit during the recent quarter.

Perhaps more concerning is a reversal of the action we've seen lately on the Dow. In the last few sessions, we've seen equities stage late-day rallies. Instead, we saw the Dow halve its gains in the last hour of trading Friday, finishing with a gain of 83.74 points. Earlier, the blue-chip average was higher by as many as 176 points.

It appears that investors were nervous ahead of Friday's report on gross domestic product for the second quarter. The advanced reading, due at 8:30 a.m. EDT, is expected to show that GDP fell by 1.5% in the quarter, an improvement from the 5.5% decline in the first quarter but still a negative number.

I suppose it didn't help that President Obama said Thursday that he expects the GDP data will show a contraction. We all know that's likely the case, but it's never good to actually hear the news. Obama did note that the economy has stepped away from the precipice, but that job losses are a major concern.

Again, this is what we already know, but it looks as though it was enough to make investors jittery before Friday's report.

-- Written by Robert Holmes in New York.

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