Friday Wrap - Dow -2.64%, S&P -2.56%, NQ -2.65%

by: Roy Mehta

Twenty years to the day of Black Monday, where the market dropped nearly 23%, stocks were pounded after a string of lousy earnings. The Dow Jones Industrial Average dropped 366.94 points (-2.64%), the Standard & Poor's 500 index lost 39.45 points (-2.65%), and the Nasdaq decreased 74.15 points (-2.65%). Volume spiked on the sell-off at the NYSE to 1.78 billion, and decliners beat advancers by a ratio of about 5:1.

The day started out poorly with Caterpillar (-5.0%) missing Q3 targets and providing a gloomy outlook on not only the company, but the US economy in general (full story). 3M (-8.6%) beat estimates, but fell short of revenue targets and lowered revenue projections for future quarters(full story). In the financial sector, Wachovia (-3.6%) missed earnings because of massive writedowns from the credit crisis (full story). Schlumberger (-11.0%) got whacked after posting an unexpected revenue decline in North America (full story). Honeywell (-3.9%) was punished for reporting a slight miss (full story). AMD (-5.5%) posted a large loss and SanDisk (-15.1%), who beat estimates, fell after pricing warnings (full AMD and SNDK stories).

Though investors focused on the bad news, some companies did have solid results. Boston Scientific (+4.1%) rallied off its beat (full story). Google (+0.8%) surpassed top and bottom-line estimates (full story). Finally, McDonald's (-0.7%) outperformed the broader market after meeting recently raised targets (full story).

Every sector finished down at least 1%, with energy (-4.3%), financial (-2.9%) and industrials (-2.9%) hit hardest. Crude experienced some weakness, shedding $0.87 to $88.60/barrel, but finished the week with a 6% gain. The US 10-year rallied 22/32 in price, lowering yields to 4.40%. The dollar index dropped another 0.24%, and fed funds futures' prices reflect a nearly 100% chance the Fed will ease later this month.

No economic news is scheduled to be released on Monday. To make this day a little more eerie, the day the Fed cut rates back in September, the Dow, Nasdaq and S&P jumped 336, 70, and 43 points. The numbers seem similar to today's, but for some reason, that day was a little more fun….

Have a pleasant weekend.

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