5:10 PM New York – Market indexes fell more than 1.5% after corporate earnings disappointed investors. European markets also closed lower as European leaders fail to resolve difference for a single banking supervision authority. Market indexes have jumped six-fold since 22% decline on Black Monday 25 years ago.
Stocks on Wall Street opened lower and accelerated the decline in the afternoon hours after earnings from McDonald’s, General Electric and Microsoft were below expectations.
The S&P 500 index dropped 1.6% and the Nasdaq declined 2.2% after tech stocks took the brunt of market sell off after Google and Microsoft led the drop. For the week, the S&P edged up 0.3% and the Nasdaq declined.
Existing home sales in September decreased 1.7% to 4.75 million annual rate and median home price increased the most since 2005 according to the latest data released by the National Association of Realtors.
Twenty five years on Black Monday, Dow Jones Industrial Average plunged 23%, the largest single one day drop. However, since then the market index has rebounded more than six-fold and trading volume has jumped more than ten-fold on exchanges.
Across the Atlantic, markets were on the defensive after European political leaders gathered for the twentieth time to discuss the three year old debt crisis. Leaders failed to agree on the time table to implement the Spanish bank bailout aid and discussed the single region wide banking supervision authority implementation.
In corporate earnings, Air Products fourth quarter net declined 57% and Baker Hughes third quarter net plunged 60%. General Electric net increased 8% but foreign exchange fluctuations affected revenues.
Honeywell net climbed 10% and McDonald’s (MCD
) net slid 3%. Microsoft (MSFT
) said revenues fell 8% and earnings dropped 22% as customers delay the purchase of Windows 8 operating system.
Chipotle Mexican Grill (CMG
) plunged 15% after it reported a decline in same store sales growth to below 5% and quarterly sales growth of 18% and earnings of 20%.
The European indexes fell after leaders delayed the implementation of Spanish banking aid legislation. German producer prices rose and the UK public sector net borrowing declined. ING agreed to sell its Asian insurance units for €1.64 billion. Carrefour agreed to sell its Colombian operations for €2 billion.
Petrofac reiterated its net profit growth target in 2012 of at least 15%. Bunzl third quarter group revenue rose 5%. Swiss Re announced management changes.
Nikkei index in Tokyo extended gains for the fourth day in a row as the yen weakened. The Nikkei jumped above 9,000 and closed more than 5% in the best weekly gain since December. China linked stocks advanced on the hopes of deceleration in the growth decline.
Australian stocks closed at a new 15-month high after sentiment recovered in the mining sector. European leaders negotiated an agreement to finalize the legislation to offer banking aid to Spain. National Australia Bank declined after it reported flat earnings expectations in the fourth quarter.
Commodities, Bonds and Currencies
U.S. treasury yield on 10-year bond decreased to 1.77% and on 30-year bond fell to 2.94%.
The U.S. dollar inched higher to $1.302 to a euro and increased against the Japanese yen to 79.28 yen.
Immediate delivery futures of Texas crude oil decreased $2.04 to $90.06 a barrel and Brent crude fell $2.34 to $110.06, futures of natural gas decreased 0.004 cents to $3.58 per mbtu and gasoline traded down 4.83 cents to 269.69 cents a gallon.
In metals trading, copper decreased 11.30 cents to $3.63 per pound, gold decreased $22.00 to $1,722.70 per ounce and silver decreased 76 cents to $32.10.