Dow falls 205; earnings fears slam stocks

Updated: 7:52 p.m. ET

Stocks suffered their worst one-day losses in about four months today as earnings from some of the biggest companies missed estimates, particularly on revenue, because of slowing economies at home and abroad.

The slump came on the 25th anniversary of the 1987 market crash that saw the Dow Jones industrials ($INDU) fall 508 points, or 23%, in a single day.

While today's slump was painful, it was nothing like 1987. The Dow fell 205 points in its worst loss since June 21. Earnings from McDonald's (MCD) and General Electric (GE) today and Microsoft (MSFT), the publisher of MSN Money, Thursday disappointed investors. In addition, Google (GOOG) was lower again after third-quarter results proved disappointing, and Chipotle Mexican Grill (CMG) shares were crushed, falling $42.93 to $243, because of slowing sales growth.

There was some cheer from the housing industry. The National Association of Realtors reported a small decline in existing-home sales in September, but prices were higher and inventories were shrinking.

The Dow finished at 13,344; the blue chips had been down as many as 237 points. The Standard & Poor's 500 Index ($INX) dropped 24 points to 1,433. The Nasdaq Composite Index ($COMPX) fell 67 points to 3,006. The S&P 500 and Nasdaq also suffered their largest losses since June 21. The indexes were lower for the second day in a row; the Nasdaq's two-day loss of nearly 99 points was its worst since May 4.

Article continues below.

The Nasdaq-100 Index ($NDX) was down 66 points to 2,678, weighed down by Google, Chipotle, Microsoft and Apple (AAPL), which represents more than 15% of the market capitalization in the index.

Apple, off $22.80 to $609.84, closed below $610 for the first time since Aug. 3 and below its 150-day moving average. The shares are down 13.1% since peaking at $702.10 on Sept. 19.

The market slump took gold (-GC) down. The metal settled down $20.70 to $1,724 an ounce. Crude oil (-CL) in New York settled down $2.05 to $90.05 a barrel.

For the week, gold was down 2%. Crude oil was off a touch less than 2%. Brent crude was off $2.35 to $110.07. The national average retail price of gasoline was $3.715, according to AAA's Daily Fuel Gauge Report. That was off 2.2 cents from Thursday and down 9.5 cents, or 2.5% from a week ago.

Despite the slump, the Dow finished with a 0.1% gain on the week. The S&P 500 was up 0.3%. The Nasdaq dropped 1.3% for the week. The market had solid rallies Monday and Tuesday.

For the year, the Dow is up 9.2%, with the S&P 500 up 14% and the Nasdaq up 15.4%.

Markets for the week
			10/19/2012			10/12/2012			% chg.			YTD chg.
Dow Industrials			13,343.51			13,328.85			0.11%			9.22%
S&P 500			1,433.19			1,428.59			0.32%			13.96%
Nasdaq			3,005.62			3,044.11			-1.26%			15.37%
Russell 2000			821.00			823.09			-0.25%			10.81%
Crude oil			$90.05			$91.86			-1.97%			-8.88%
(per barrel)			0.00			0.00			0.00%			0.00%
U.S. Dollar Index			79.69			79.74			-0.07%			-1.04%
10-yr. Treasury			1.77%			1.66%			6.31%			-5.51%
Gold			$1,724.00			1,759.70			-2.03%			10.03%

Why the market slumped

What's bothering the market starts with the global economy.

 

"Europe is tough," GE CEO Jeff Immelt said on today's earnings call. "Asian resource risk countries are OK, and the U.S. had packets of growth but still some uncertainty."

Add to that concerns about slowing growth in the search-engine business and the slide in personal computer sales.

Semiconductors and biotechnology stocks were among the biggest losers today.

Advanced Micro Devices (AMD) was down 44 cents to $2.18. The percentage decline was the worst among S&P 500 stocks. The company reported weak earnings late Thursday because of the slumping personal-computer market, and it plans to cut its workforce by 15%.

Marvell Technology (MRVL) was down $1.26 to $7.57 on the chipmaker's lowered revenue forecast and the surprise departure of its chief financial officer on Thursday. Many brokers downgraded the stock.

The Philadelphia Semiconductor Index ($SOX) was down 11 points to 365. It's down just 0.4% for the week but off 4.4% for the month.

Google was down $13.21 to $681.79 because of worries that its revenue growth will be constrained as consumers surf the Web via their smartphones. The shares are down 8.7% this week and nearly 10% for the month.

Facebook (FB), facing the same challenges, was up 2 cents to $19.

Also falling because of weak outlooks were Air Products (APD), a producer of industrial gases,  and Parker Hannifin (PH), which makes products for industrial process. Shares were down $5.36 to $79.99 and $6.57 to $78.50, respectively. Air Products was the sixth-worst S&P 500 performer; Parker Hannifin was the fourth-worst.

"We are starting our 2013 fiscal year with weak economic momentum worldwide," Air Products CEO John McGlad said in a statement.

The pressures of weak revenue growth will a concern next week. Due to report include:

• Monday: Caterpillar (CAT), Freeport-McMoRan Copper & Gold, (FCX) and Texas Instruments (TXN).
• Tuesday: 3M (MMM), DuPont (DD), Facebook (FB), United Parcel Service (UPS) and Whirlpool (WHR).
• Wednesday: AT&T (T), Boeing (BA) and Ryland (RYL).
• Thursday: Amazon.com (AMZN), Apple and ConocoPhillips (COP).
• Friday: Arch Coal (ACI) and Weyerhaeuser (WY). 

Energy prices -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Crude oil (-CL)			$90.05			$92.10			-2.32%			-8.88%
(per barrel)
Heating oil (-HO)			$3.1176			$3.1669			-1.32%			6.98%
(per gallon)
Natural gas (-NG)			$3.6170			$3.5870			8.95%			21.01%
(per mil. BTU)
Unleaded gasoline (-RB)			$2.6721			$2.7269			-8.49%			0.55%
(per gallon)
Brent crude			$110.14			$112.42			-3.91%			2.57%
(per barrel)
Retail gasoline			$3.7150			$3.7370			-1.90%			13.40%
(per gallon; AAA)

A dubious anniversary

The 23% Dow decline in 1987 hasn't been equaled since, not even during the 2008 crash. What was remarkable about the 1987 event was that the averages still ended 1987 with a gain. The market recovered all of its losses in about 15 months.

The Dow and the S&P 500 are still 6% and 8% below their 2007 peaks. The Nasdaq, however, is 5% over its 2007 high -- thanks especially to gains for Apple and Google.

The Dow's 508-point loss wasn't exceeded until Oct. 26, 1997, when the Dow fell 554 points as a financial panic in Asia hit markets. On Sept. 17, 2001, the first day of trading after the Sept. 11, 2001, terror attacks, the Dow fell 685 points.

The two largest one-day plunges occurred in the fall of 2008 after the Lehman Bros. collapse.

Today's problems are quite different from the 1987 crash, when the market fell due to program trading that fed upon itself throughout the day. Also, interest rates had been rising in the spring and summer.An overheated market ultimately fell over. There were worries about tax increases and a slowing economy as well.

Home sales dip, but prices rise
The day's big economic report was existing-home sales, which fell fell 1.7% from August to September to a seasonally adjusted 4.75 million units, the National Association of Realtors said. But August sales had risen some 8% from July.

The median price of a home rose 11.3% from a year ago to $183,900, the highest level since 2005. The inventory of homes for sale fell to 5.9-month supply, the lowest level since March 2006.

The future looks stronger -- if the economy holds up, economists said today. Homebuilding shares were mostly higher.

Not much to cheer about

Only 20 stocks, including Fortune Brands (FBHS) and Autonation (AN), hit all-time highs today. Exxon Mobil (XOM), Lennar (LEN), Lowe's (LOW) and Capital One Financial (COH) were among 84 stocks hitting 52-week highs.

Only one of the 30 Dow stocks was higher: Home Depot (HD), up 9 cents to $61.89. Rival  Lowe's added 7 cents to $32.64.

Only 31 &P 500 stocks were higher, led by Capital One, Robert Half International (RHI) and SanDisk (SNDK). Advanced Micro Devices, Chipotle, E*Trade Financial (ETFC) and Parker Hannifin were the laggards.

Only six Nasdaq-100 stocks were higher, led by SanDisk and O'Reilly Automotive (ORLY). Marvell and NVidia (NVDA) were the laggards.

Short hits from the markets -- New York close
			Fri.			Thur.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0900%			0.090%			0.00%			800.00%
5-year Treasury note			0.751%			0.780%			19.21%			-9.52%
10-year Treasury note			1.768%			1.826%			8.00%			-5.51%
30-year Treasury bond			2.937%			3.007%			-3.13%			1.66%
Currencies
U.S. Dollar Index			79.688			79.425			-0.42%			-1.04%
British pound			1.6015			1.6054			-0.90%			3.07%
(in U.S. $)
U.S. $ in pounds			£0.624			£0.623			0.90%			-2.98%
Euro in dollars			$1.30			$1.31			1.35%			0.55%
(in U.S. $)
U.S. $ in euros			€ 0.768			€ 0.765			-1.34%			-0.54%
U.S. $ in yen			79.49			79.29			1.95%			3.10%
U.S. $ in Chinese			6.27			6.25			-0.10%			-0.81%
yuan
Canada dollar			$0.000			$1.015			-100.00%			-100.00%
(in U.S. $)
U.S. dollar			$0.993			$0.985			0.97%			-2.64%
(in Canadian $)
Commodities
Gold (-GC)			$1,724.00			$1,744.700			-2.81%			10.03%
(per troy ounce)
Copper (-HG)			$3.638			$3.743			-3.21%			5.86%
(per pound)
Silver (-SI)			$32.0970			$32.868			-7.17%			14.98%
(per troy ounce)
Wheat (-ZW)			$8.7250			$8.685			-3.32%			33.67%
(per bushel)
Corn (-ZC)			$7.6150			$7.608			0.69%			17.79%
(per bushel)
Cotton			$0.7688			$0.777			8.82%			-16.14%
(per pound)
Coffee			$1.6165			$1.586			-6.83%			-29.61%
(per pound)
Crude oil (-CL)			$90.05			$92.100			-2.32%			-8.88%
(per barrel)