Dow -171.44 (-1.38%)
Nasdaq -34.72 (-1.47%)
S&P 500 -21.46 (-1.59%)
News That Moved the Market
Market Falls Short Despite Solid Earnings. All major indices started higher Friday on earnings news from Microsoft (MSFT, -0.9%) and Caterpillar (CAT, +1.0%). Microsoft beat analysts' expectations and had enough confidence in its performance to increase revenue and EPS guidance for its fiscal full-year, which ends in June. Caterpillar was able to overcome weakness in the U.S. market by generating impressive international sales. Overall, the construction and mining equipment company increased profits by 11% and reaffirmed its earnings growth forecast of 5%-15%. Stocks received a boost from the earnings news, but unsurprisingly, were unable to hold on to gains, as traders did not want to keep their long positions into the weekend and worries about the credit markets resurfaced at the end of the day.
Honeywell Able to Buck the Trend. Honeywell (HON, +3.7%) ended higher after it posted an 18% increase in profits late Thursday. The company saw revenue growth in all 11 of its divisions and reaffirmed its 2008 EPS guidance.
Goldman to Fire Underperformers. Rumors about Goldman Sachs (GS, -3.8%) cutting up to 5% of its work force scared some investors and pushed the company's stock lower. Goldman said the moves were not layoffs and will target the bottom 5% of its workforce in its annual performance reviews. The move should affect about 1,500 employees, but it is unclear how the overall headcount at Goldman will change as a spokesman for the company added it will continue to actively recruit.
More Defendants in Countrywide Suit. Later during Friday's session, New York City and state officials announced it would be expanding a class-action lawsuit for fraud against Countrywide (CFC, -1.5%) to include more company employees and a total of 28 banks and accounting firms that did business with the lender. The adding of some of the world's largest banks led to the last wave of selling at the end of the day.
FDA Will Make Vytorin Decision in 6 Months. Shares of Merck (MRK, -3.6%) and Schering-Plough (SGP, -5.7%) were off after regulators announced it will take 6 months to decide what action will be taken after a study found the companies' cholesterol drug, Vytorin, may not be as effective as originally believed . The FDA made it clear that it is not advising to stop prescribing the drug, but ambiguity and speculation took their toll on the drug stocks.
Notable Earnings (Complete List Here):
10:00 AM: New Home Sales