Earnings season had been going well until today. Misses by General Electric (GE 2.39%), McDonald's (MCD +0.75%), and Microsoft (MSFT 1.57%) all combined to send the Dow Jones Industrial Average (^DJI 0.26%) 205 points lower, or 1.5%. The damage added up to the Dow's worst single day since June, but the blue chips still gained slightly for the week.
Mickey D's led the tumble, falling 4.5%, after both sales and profits fell from a year ago, giving it its worst top-line growth figure in nine years. EPS of $1.43 missed estimates at $1.47, though actual profits would have been $0.08 higher without currency exchange effects. Same-store sales were also anemic at just 1.9%, the first time since 2003 that comps have been below 2%. Oddly enough, same-store sales in Europe were the strongest of its three major regions.
GE, meanwhile, dropped 3.8%, after cutting its 2012 sales forecast on poor performances from its financial and industrial divisions. Management said revenue would only grow 3% and not the 5% that it earlier predicted, and GE Capital's contribution would fall by 10%. Sales of $36.3 billion missed estimates of $36.9 billion, while adjusted earnings of $0.36 per share matched Wall Street's target. The lower financial revenue is the result of cutbacks in response to the financial crisis, and the conglomerate is also suffering from pared-back demand for its jet engines and health care equipment.
Finally, Microsoft, which reported earnings last night, fell 2.9% on lower sales and profits, as PC demand continues to slow. Revenue dropped 8%, and net income dipped 22%, though those numbers don't include pre-orders for Windows 8. Sales at other divisions were also slower than expected, such as Server & Tools, which provides back-office software to businesses.
Cisco (CSCO +0.58%) and Caterpillar (CAT 0.96%), which have not reported yet, also fell more than 3%, as pessimism in the tech and manufacturing sectors mounted. Caterpillar, which will release earnings on Monday, said that its September heavy-equipment sales growth slowed to 6%.
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