MARKET SNAPSHOT: U.S. Stocks Fall As GE Results Outweigh Microsoft's Record

By Sara Sjolin, MarketWatch , Ryan Vlastelica

Dow, S&P 500 on track for a third straight weekly decline

U.S. stocks fell on Friday, with markets dropping in a broad decline after the latest batch of corporate earnings raised new concerns about whether the pace of economic activity was justifying equity valuations.

General Electric Co.(GE) sank 2.2% to $28.42 after the industrial conglomerate reported weaker-than-expected revenue growth (http://www.marketwatch.com/story/ge-revenue-misses-expectations-while-profit-beats-2016-10-21) in its latest quarter. The stock was on track for its biggest one-day decline since early September and was trading at levels last seen in February.

"When a bellwether like GE gives a tepid--if not grim--outlook for economic activity, investors are going to react to that, and pretty negatively," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

The Dow Jones Industrial Average lost about 100 points, or 0.5%, to 18,066, while the S&P 500 index lost 8 points, or 0.4%, to 2,133. The Nasdaq Composite Index slipped about a 1 point to trade at 5,240, a move of less than 0.1%.

GE's results overshadowed some positive corporate news. McDonald's Corp.(MCD) reported better-than-expected (http://www.marketwatch.com/story/mcdonalds-shares-rise-after-earnings-beat-2016-10-21) third-quarter earnings, as did Microsoft Corp. (MSFT), thanks to its cloud-computing division (http://www.marketwatch.com/story/the-secrets-behind-microsofts-big-profit-beat-and-dot-com-boom-share-price-2016-10-20). Despite those, S&P 500 companies are expected to post their sixth straight quarter of declining earnings (http://www.marketwatch.com/story/5-things-to-expect-this-earnings-season-2016-10-07) this quarter, according to FactSet data.

McDonald's rose 2.6% to $113.47 while Microsoft climbed 5% to $60.10, hitting a new all-time record. The two companies were the only Dow components to rise on the day.

"Despite a couple of good reports, we're in the midst of another earnings season that is hardly painting a bright picture," Luschini said. "Having another quarter where profits contract is not an underpinning for stocks to advance, and the market is searching for, if not demanding, a catalyst to move higher. At the moment, one is lacking."

Read:The stock market is caught deep in 'no man's land' (http://www.marketwatch.com/story/the-stock-market-is-caught-deep-in-no-mans-land-2016-10-20)

Both the Dow and S&P 500 were on track for their third straight weekly decline, though the tech-heavy Nasdaq, which was supported by Microsoft on Friday, was on track to break its own two-week losing streak.

On Thursday, U.S. stocks closed lower (http://www.marketwatch.com/story/us-stock-futures-in-holding-pattern-after-debate-and-ahead-of-big-data-dump-2016-10-20), partly driven by a 2.3% slide for oil futures . Crude continued its weakness on Friday (http://www.marketwatch.com/story/strong-dollar-remarks-by-rosneft-chief-weigh-on-oil-2016-10-21), down 0.4% at $50.44 a barrel ahead of the weekly Baker Hughes (BHI) rig-count data.

Among other big movers, Reynolds American Inc.(RAI) soared 16% to $55.16 after British American Tobacco PLC(BATS.LN) (BATS.LN) offered to buy the remaining stake in its U.S. peer it doesn't already own for $47 billion (http://www.marketwatch.com/story/bat-in-47-billion-offer-for-reynolds-stake-2016-10-21). Reynolds confirmed it had received the offer.

PayPal Holdings Inc.(PYPL) jumped 7.1% to $42.94 after its earnings late Thursday met expectations.

On a downbeat note, Advanced Micro Devices Inc.(AMD) slumped 6.4% to $6.53 after the chip maker saw its loss widen in the third quarter (http://www.marketwatch.com/story/advanced-micro-devices-slides-after-posting-wider-quarterly-loss-2016-10-20).

Like GE, Honeywell International Inc.(HON) sales also fell short of forecasts (http://www.marketwatch.com/story/honeywell-sales-fall-short-of-estimates-2016-10-21). The stock rose 0.1% to $108.21.

Qualcomm Inc.(QCOM) rose 1.3% to $68.24 in the wake of a Bloomberg report that its bid to takeover NXP Semiconductors NV (NXPI) was nearing its final stages (http://www.bloomberg.com/news/articles/2016-10-20/qualcomm-said-to-be-near-final-nxp-deal-may-announce-next-week).

Fed speakers: Fed Gov. Daniel Tarullo is due to give a speech at a Columbia Law School Conference in New York at 10:15 a.m. Eastern Time, followed by San Francisco Fed President John Williams's keynote speech at the Federal Home Loan Bank's 2016 Member Conference at 2:30 p.m.

Other markets: Asia markets closed mostly lower (http://www.marketwatch.com/story/asian-markets-lower-as-odds-of-fed-rate-hike-increase-2016-10-20) on the higher expectations of Fed tightening. Trading was suspended in Hong Kong (http://www.marketwatch.com/story/stock-market-shuts-as-hong-kong-braces-for-typhoon-2016-10-20), however, as Typhoon Haima approached.

Stocks in Europe wobbled (http://www.marketwatch.com/story/european-stocks-edge-up-with-weekly-win-in-sight-2016-10-21) as investors digested the European Central Bank's message from Thursday's meeting (http://www.marketwatch.com/story/will-mario-draghi-leave-investors-high-and-dry-in-december-2016-10-20).

The ICE dollar index was up 0.4% at 98.716 on Friday, set for a 0.6% weekly gain. The dollar has been climbing steadily this month on rising expectation the Fed will lift interest rates at its December meeting.

Gold futures were trading mostly flat (http://www.marketwatch.com/story/gold-futures-drop-but-cling-to-weekly-gain-as-dollar-recovers-2016-10-21), pressured by the stronger dollar.

(END) Dow Jones Newswires

October 21, 2016 10:12 ET (14:12 GMT)

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