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GLOBAL MARKETS-Stocks, oil fall on US results, economy fears
October 19, 2012 / 8:46 PM / in 5 years

GLOBAL MARKETS-Stocks, oil fall on US results, economy fears

* Dow, SP500, Nasdaq drop sharply
    * GE, McDonald's results clip recent Wall Street rally
    * Euro eases after U.S. home resales fall, oil prices down
    * Gold also falls, hurt by slide in U.S. stock prices

    By Herbert Lash
    NEW YORK, Oct 19 (Reuters) - World stocks and crude oil fell
on Friday as investors took a dim view of U.S. corporate
earnings after General Electric and McDonald's disappointed,
while Europe's debt crisis and ongoing concerns about global
growth also weighed on sentiment.
    The dollar climbed against the euro and the yen as a
perceived lack of progress on a Spanish bailout request reminded
investors of the headwinds facing the world economy.
    Gold fell more than 1 percent, its biggest one-day slide in
more than three months, as bullion was hit by technical selling
and the decline on Wall Street, which erased most of the week's
    The CBOE Volatility Index, the so-called fear gauge, 
jumped 13.5 percent to 17.06, its highest level since Sept. 5.  
    The stock market sell-off occurred on the 25th anniversary
of the Black Monday crash of 1987, when the Dow plummeted 22.6
percent - its worst single-day percentage loss ever. 
    "This sell-off is definitely earnings-driven but there is
also an element of profit taking after several strong days,"
said Andrew Wilkinson, chief economic strategist at Miller Tabak
& Co in New York.  
    Revenue missed analysts' expectations at GE due to
unfavorable exchange rates, while McDonald's profits
also missed expectations because of the weak global economy.
    GE fell 3.4 percent to $22.03 and McDonald's slid 4.5
percent to $88.72. 
    Of the 116 S&P 500 companies that have reported so far in
the U.S. earnings season, 60 percent have exceeded analysts'
estimates, a rate lower than the 67 percent pace of the previous
four quarters, according to Thomson Reuters data.
    The Dow Jones industrial average was down 205.43
points, or 1.52 percent, at 13,343.51. The Standard & Poor's 500
Index was down 24.15 points, or 1.66 percent, at
1,433.19. The Nasdaq Composite Index was down 67.24
points, or 2.19 percent, at 3,005.62. 
    "We've had a nice run up and you start seeing these earnings
miss. It may be time to take some money off the table," said
Larry Peruzzi, senior equity trader at Cabrera Capital Markets
Inc in Boston.
    European shares snapped a four-day winning streak as signs
of disagreement among European Union leaders over how to help
the region's debt-ridden banks hit financial stocks.
    Equities in Europe might be prone to a bigger fall because
of the perceived lack of progress in finding long-lasting
solutions to the euro zone debt crisis, said Luc Bocahut, a
portfolio manager at Monaco-based Tiverton Trading.
    "I would be quite bearish here. They really haven't made
much progress," Bocahut said.
    U.S. stocks extended their slide to more than 1.5 percent as
earnings from large multinationals underscored the effect of the
global economic slowdown. 
    MSCI's all-country world equity index was
down 1.3 percent at 333.96. 
    In Europe, the FTSEurofirst 300 index of leading
regional companies closed down 0.8 percent at 1,111.85, while
the pan-regional Euro STOXX 50 closed down 1.24
percent at 2,542.24.
    The euro slipped against the dollar as a perceived lack of
progress on a Spanish bailout request curbed demand. Risk
appetite also eased on a report showing U.S. home resales fell
in September, a reminder that America's housing sector is a long
way from a full recovery. 
    The euro was last down 0.3 percent at $1.3021, close
to a session low of $1.3018.
    U.S. Treasury prices edged up as selling pressure that has
hurt the market the past four days subsided. Recent stronger
U.S. economic data and hopes that European leaders are taking
steps to resolve their debt crisis caused a dramatic jump in
Treasuries yields this week amid heavy selling of the debt.
    The market is also pricing in an expectation that the U.S.
Federal Reserve will start raising rates in 2014, instead of
2015, for the first time since Fed Chairman Ben Bernanke's
speech in Jackson Hole in August, said Jim Vogel, interest rate
strategist at FTN Financial in Memphis, Tennessee.
    "The question everyone is asking is 'Was QE3 even
necessary?' given that we are already seeing evidence of a nice
third-quarter rebound," he said.
    The benchmark 10-year U.S. Treasury note was up
18/32 to yield 1.7677 percent.
    Brent and U.S. crude futures fell more than 1 percent on 
concerns about the European debt crisis, a stronger dollar and
the decline in equity markets.
    December Brent crude oil futures slid $2.28 to
settle at $110.14 a barrel. U.S. crude settled down $2.05
at $90.05 a barrel.
    U.S. COMEX gold futures for December delivery settled
down $20.70 an ounce at $1,724.
    Spot gold was down 1.2 percent at $1,720.80 an ounce.

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