* McDonald's lower quarterly profit misses estimate
* GE profit meets forecasts, revenue shy of estimates
* U.S. existing home sales fall as inventories drop
* Dow off 1.4 pct, S&P 500 off 1.6 pct, Nasdaq off 2.1 pct
By Chuck Mikolajczak
NEW YORK, Oct 19 (Reuters) - U.S. stocks were on track for a
second straight decline on Friday as earnings from General
Electric and Microsoft rekindled worries a b out corporate
profits, weighing on the technology and industrial sectors.
The sell-off occurred on the 25th anniversary of the stock
market crash of 1987 - known as Black Monday - when the Dow
Jones industrial average plummeted 22.6 percent - its worst
single-day percentage loss.
Earnings on Friday from large multinationals underscored the
effect of the global economic slowdown. General Electric Co
shares fell 3.3 percent to $22.05. The stock was one of
the biggest drags on the S&P 500 after the largest U.S.
conglomerate pos t ed quarterly earnings that met Wall Street's
expectations, but revenue fell short of estimates. GE, however,
stood by its full-year earnings forecast.
The S&P 500 appeared to be once again testing its 50-day
moving average, seen as a key support level that could trigger
more selling if convincingly broken, after the benchmark index
managed to bounce off that average earlier in the week.
The benchmark S&P 500 index has been range-bound since the
Sept. 13 announcement by the U.S. Federal Reserve of its latest
plan to stimulate the economy. During that period, the S&P 500
has moved between near five-year highs and the 50-day moving
"It does seem we are in this range-bound area, still up near
the highs, which is good, but these earnings better start coming
in better or we will be in for more pain," said Ryan Detrick,
senior technical strategist at Schaeffer's Investment Research
in Cincinnati, Ohio.
"When you get to the top of a range like we were on the S&P,
you can definitely see where you work up and get beat down
really fast, and clearly when you get the news driving it, that
is what definitely can happen."
The beat rate for revenue forecasts so far is 41.4 percent,
trailing both the 55 percent average over the past four quarters
and the long-term average of 62 percent, according to Thomson
McDonald's Corp was the heaviest weight on the Dow
industrials, down 4 percent at $89.17 after the world's biggest
fast-food restaurant chain reported a lower quarterly profit
that missed analysts' expectations.
The Dow Jones industrial average lost 188.29 points,
or 1.39 percent, to 13,360.65. The Standard & Poor's 500 Index
dropped 22.59 points, or 1.55 percent, to 1,434.75. The
Nasdaq Composite Index fell 63.59 points, or 2.07
percent, to 3,009.28.
Despite the day's declines, the S&P 500 has advanced 0.4
percent so far this week. The Dow is up 0.2 percent, but the
Nasdaq is off 1.1 percent for the week. Each of the three major
U.S. stock indexes advanced for the first three days of the week
as corporate earnings appeared to be better than initially
On Thursday, a string of earnings disappointments, including
surprisingly weak results from Google that were
erroneously released hours before they were expected, gave
investors a reason to sell some stocks and the market finished
lower. On Friday at midday, Google's stock was down 2 percent at
Microsoft Corp said late Thursday its quarterly
profit fell a greater-than-expected 22 percent, as sales of
computers running its Windows operating system dipped and some
revenue was deferred before the release of its core Windows and
Office products. The stock tumbled 2.9 percent to $28.64.
"Tech is obviously very sensitive to the U.S. economy and
global economy, for that matter, and the fact they are missing
consistently is bringing up a 'sell first, ask questions later'
mentality," Detrick said.
But diversified U.S. manufacturer Honeywell International
Inc was a bright spot, up 1.7 percent at $62.47 after
reporting a 10 percent jump in quarterly earnings as declining
natural gas prices helped increase profit at its UOP chemical
arm, offsetting weakness in Europe.
The S&P industrials sector index tumbled 1.6
percent, while the S&P information technology sector index
lost 1.9 percent.
Of the 116 S&P 500 companies that have reported results so
far in this earnings season, 60 percent have exceeded analysts'
estimates. Earnings are expected to drop 1.8 percent in the
third quarter from a year ago, according to Thomson Reuters
data, compared with a forecast calling for a drop of 2.3 percent
earlier in the week.
Semiconductors added to the weakness, with a 4.9 percent
gain in SanDisk Corp shares to $44.98 overshadowed by a
14.4 percent plunge in the stock of Marvell Technology Group Ltd
, which fell to $7.56, and a 15.1 percent fall in
Advanced Micro Devices Inc shares to $2.22. Both SanDisk
and AMD posted quarterly results after the bell on Thursday,
while Marvell cut its outlook.
The PHLX semiconductor index lost 2.6 percent.