Stocks tumble on weak earnings reports

Gray Friday?

It was just a quirk of the calendar that stocks fell hard on the quarter-century anniversary of the 1987 market crash.

Friday's 205-point drop in the Dow Jones industrial average was far less dramatic than the infamous 508-point collapse on Black Monday, which at the time was a 23% plunge.

Still, investors were rattled by disappointing earnings reports from bellwethers such as General Electric Co., Microsoft Corp. and McDonald's Corp.

The Dow suffered its worst drubbing in four months, skidding 205.43 points, or 1.5%, to 13,343.51. The Standard & Poor's 500 index declined 24.15 points, or 1.7%, to 1,433.19.

Technology stocks, which had been leading the market higher for much of this year, took a beating that extended declines over the past few weeks. The Nasdaq composite index lost 67.24 points, or 2.2%, to 3,005.62.

"What is hitting home is the recognition that market leaders, particularly in the technology sector, are not putting up the growth numbers you would expect to see in a robust economy," said Patrick O'Hare, chief market analyst at briefing.com.

Google Inc., which fell 8% Thursday on softer-than-expected earnings, slipped an additional 2%. Microsoft gave up 3% and is off 9% in the last month.

Apple Inc., sagged nearly 4% and has shed 13% since hitting an all-time record above $702 a month ago. It closed below $610 Friday.

Still, the market has held up fairly well given the dispiriting profit news, analysts said. The S&P managed to eke out a 0.3% gain for the week.

In a positive sign, investors who are dumping tech stocks appear to be redirecting much of their cash into other sectors rather than abandoning the market altogether, analysts said.

Generally upbeat economic news has buoyed the spirits of investors, who are hoping that increased activity will translate into rosier corporate earnings early next year.

"The net effect is no harm, no foul," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "Everyone knew earnings were going to be not particularly appealing."

And they haven't been.

Third-quarter profits at S&P 500 companies are expected to slide an average 1.8%, their worst performance in three years, according to Thomson Reuters.

Sales at General Electric fell shy of analyst estimates, leading the industrial behemoth to cut its full-year revenue outlook.

At Microsoft, revenue and earnings were short of expectations as the company grapples with declining sales of personal computers.

McDonald's missed estimates and suffered slowing growth at its restaurants worldwide.

Besides earnings, some investors are unnerved by the possibility that Mitt Romney could be elected president, said Bill King, chief market strategist at M. Ramsey King Securities in Burr Ridge, Ill.

Though some investors consider Romney more business-friendly than President Obama, others are worried that he would blunt efforts by the Federal Reserve to stimulate the economy.

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