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US:Wall St drops on bleak GE outlook

Friday, October 21, 2016 - 22:25

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[WASHINGTON] Wall Street fell sharply Friday morning as GE's comments on the economy and its disappointing forecast weighed on industrials stocks, but a rally in Microsoft and McDonald's helped limit losses.

GE's shares were off 2.3 per cent, weighing the most on the S&P, after the conglomerate lowered its full-year revenue growth target and narrowed its profit forecast.

The S&P 500 industrial index tumbled 1.17 percent to a more than three-month low. United Technologies and 3M both fell roughly 1 percent. "Although earnings have been coming in mixed, GE's comments of a sluggish economy is causing investors to take a step back,"said Andre Bakhos, managing director at Janlyn Capital in Bernardsville, New Jersey.

At 9:39 am the Dow Jones Industrial Average was down 95.7 points, or 0.53 per cent, at 18,066.65.

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The S&P 500 was down 9.61 points, or 0.45 per cent, at 2,131.73 and the Nasdaq Composite was down 11.54 points, or 0.22 per cent, at 5,230.30.

Helping curtail the losses were Microsoft and McDonald's, both of which reported strong quarterly results.

Microsoft's stock surged 5.6 per cent at an all-time high of US$60.45, while McDonald's rose 3.10 per cent. The two stocks were the top boosts to the S&P and the Dow.

Nine of 11 major S&P 500 companies were trading lower. The only gainers were technology and consumer staples , which was boosted by Reynolds American.

Reynolds surged 17.24 per cent after British American Tobacco's US$47 billion-offer to buy the 58 per cent of the tobacco company it doesn't already own.

Also denting sentiment was the persistent strength in the strong dollar, which affects the overseas income for companies. The dollar was up 0.43 per cent at 98.73.

REUTERS

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