Stocks drop 200 points on anniversary of '87 crash

12:22 PM, Oct 19, 2012   |    comments
1987 stock market crash. (Photo credit MARIA BASTONE/AFP/Getty Images)
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Staff and wire reports

NEW YORK -- It's the 25th anniversary of the 1987 stock market crash, and today's trading is bad, but not nearly as grim as 25 years ago.

On that day, USA TODAY reported "the Dow Jones industrial average spun into a dizzying free fall, losing 508.32 points to close at 1738.41 ... The Dow's one-day loss of 22.6% destroyed the record set by the 12.8% plunge on Oct. 28, 1929, Black Monday. Volume was a staggering (for that time) 604.33 million shares, shattering Friday's record of 338.5 million."

"It's a worldwide financial panic," Hugh Johnson, then an analyst at First Albany Corp., said at the time. "People are scared to death."

Back in 2012, disappointing earnings reports from McDonald's, Microsoft and other companies dragged the stock market down Friday.

McDonald's led a broad drop in the Dow Jones industrial average, falling 3%. The Dow was down 100 points at 13,448 a half hour after the opening bell.

McDonald's profit sank as a strong dollar hurt international results, which account for two-thirds of its business. The fast-food giant's stock lost $2.86 to $90.00.

Microsoft's income fell 22% as PC sales took a dive and as troubles in Europe took their toll. Its stock lost 55 cents to $28.94.

General Electric, another economic bellwether, fell 3%. The company reported stronger profits early Friday but its revenue missed Wall Street's expectations. Orders for new equipment and services sank, mainly because wind turbine orders have fallen because a key U.S. federal subsidy for wind power expires at the end of the year.

Among other stocks making big moves, Chipotle Mexican Grill plunged 14%, the most in the S&P 500, after the burrito chain forecast that revenue growth would slow sharply next year. The stock had been a favorite among investors thanks to super-fast growth in recent years.

Weak earnings from Google and a rise in claims for unemployment benefits helped pull the stock market lower Thursday. That snapped a four-day run of gains for the Dow.

The major market indexes are still higher for the week. The Dow is up 0.9% and the S&P 500 up 1.4%.

In other Friday trading, the yield on the 10-year Treasury note slipped to 1.81% from 1.83% late Thursday.

Oil prices edged up close to $93 a barrel after a pipeline transporting crude from Canada to the Midwest was shut down for repairs.

Thursday's tech earnings reports didn't help Friday's mood.

The star-studded N.Y. Yankees aren't the only ones swinging and missing these days. Wall Street tech titans keep "whiffing" on their third-quarter earnings reports, causing Wall Street to wonder if the economic slowdown is finally infecting the once-immune tech sector.

Search giant Google missed big on its third-quarter earnings announced Thursday, which was made worse by the fact the report was mistakenly released four hours early by its filing agent, R.R. Donnelley, which hit the send button early. After the bell, Microsoft, another tech powerhouse, also came up short. That followed earlier misses by chipmaker Intel, which has been hurt by slowing PC sales due to the popularity of tablets and mobile devices, as well as IBM, best known as Big Blue for its computing clout.

The strikeouts from the tech leaders are akin to the swing-and-miss routine this postseason by onetime slugger Alex Rodriguez. The profit pause is being driven by the transition away from PCs to digital hand-held devices. Lower PC demand hurts profits of both chip and computer makers, while rising handheld usage creates problems for social media and search engine names because digital advertising revenue is skimpier.

Earnings misses in tech-land could be a prologue of things to come amid the global slowdown, says J.J. Kinahan, chief derivatives strategist at TD Ameritrade. "It could (affect) the way investors view 2013," he says.

Says money manager Pat Adams of Choice Funds: "Is this a one-quarter event or a four-quarter event?"

Contributing: USA TODAY's Adam Shell; Associated Press


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