Stocks are falling fast on the 25th anniversary of Black Monday, the day the Dow Jones Industrial Average (INDEX: ^DJI ) lost 23% in a single session. With 40 minutes left in trading, the Dow is down 1.55%, and the S&P 500 (INDEX: ^GSPC ) has given up 1.66%. Ghosts of crashes past are on the minds of traders, but it's earnings from tech companies that have been a real drag on the market.
Microsoft's (Nasdaq: MSFT ) shares lost 3.1% after the company reported disappointing third-quarter earnings. Sales fell 7.8% to $16 billion, and earnings per share of $0.53 were $0.03 short of estimates. Microsoft is about to launch Windows 8, as well as a new tablet built on the mobile version of the operating system, and sales suffered as IT departments and consumers put off spending until the upgrade is released.
Microsoft's results echo weakness from chip makers Intel (Nasdaq: INTC ) and AMD (NYSE: AMD ) , which just announced that it would cut its workforce by 15%. The PC business is clearly slowing down, and it's dragging a number of high-profile tech stocks down with it.
Caterpillar (NYSE: CAT ) was the other big loser on the Dow, falling 3.1% after reporting a big slowdown in sales. Retail sales grew just 6% in September, down from 13% in August and 14% in July. The company has been growing quickly coming out of the recession, but with the global economy losing steam, Caterpillar is in for slower growth ahead.
It's been a challenging earnings season so far, particularly for the tech sector, and investors are losing confidence in stocks as a result. But it's important to keep in mind that Windows 8 will bring a new buying cycle, and the operating system appears to have some momentum. Presales are 40% higher than those of Windows 7, and Microsoft's new tablet, the Surface, sold out its least expensive model. Tech is down, but I wouldn't call it "out" just yet.
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