US Stocks Fall on Rising Worries Over Spain
07/20/2012| 11:10am US/Eastern
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--Stocks drop as worries about Spain's economy weigh
--Europe broadly lower as 10-year Spanish bond yields rise above 7%
--Google, GE gain after results; Microsoft falls
By Chris Dieterich
NEW YORK--Stocks skidded as worries about Spain offset a batch of upbeat corporate earnings reports from blue-chip companies.
The Dow Jones Industrial Average shed 107 points, or 0.8%, to 12836 in Friday morning trading.
The Standard & Poor's 500-stock index declined 11 points, or 0.8%, to 1365, and the Nasdaq Composite Index lost 25 points, or 0.9%, to 2941.
Nine of the S&P 500's 10 sectors lost ground, led lower by financial stocks. Bank of America shed 2.1%, while Travelers Cos. fell 1.6%. Only defensive-oriented utility stocks traded higher.
Search giant Google gained 2.8% after beating second-quarter earnings estimates, as losses stemming from the newly acquired Motorola hardware business were more than countered by strength in advertising.
General Electric gained 0.4% after the conglomerate's earnings came in slightly better than estimates, while revenue missed.
Microsoft fell 0.8% after the software company reported quarterly earnings that exceeded analyst expectations, boosted by strength in its Office and enterprise software businesses, although revenue fell a bit shy of forecasts.
"Earnings have been a mixed bag, but the common theme has been beating reduced expectations more often than not," said Lawrence Creatura, portfolio manager at Federated Investors.
European markets were broadly lower after Spain's Valencia region said it plans to seek help from the government to refinance its debt. A downward revision to Spanish growth expectations compounded investor worries. The Stoxx Europe 600 fell 1.1%, and Spain's IBEX-35 index tumbled 4.7%, even as euro-zone finance ministers approved a plan to bail out Spain's banks. The yield on benchmark 10-year Spanish bonds rose back above 7%.
"There's additional re-focus back on Spain, and it does look like a little bit of a run on Spanish bonds," said Jim Russell, chief equity strategist at U.S. Bank Wealth Management.
"While earnings continue to march forward, we think the macro background continues to soften," Mr. Russell said.
Asian markets also declined, with Japan's Nikkei Stock Average shedding 1.4% and China's Shanghai Composite losing 0.7%.
Crude-oil futures fell 1.7% to $91.36 a barrel, while gold futures gave up 0.3% to $1575 a troy ounce. The U.S. dollar rose against the euro but lost ground against the yen. The yield on the 10-year U.S. Treasury bond fell to 1.458%.
In other corporate news, Advanced Micro Devices declined 12% after the semiconductor maker's second-quarter earnings missed estimates, citing weakness in the global economy and lower demand for desktop processors in China and Europe.
Chipotle Mexican Grill slumped 23% after the company's second-quarter earnings beat forecasts, but revenue missed and the outlook for full-year same-restaurant sales growth was below the second-quarter's pace.
Xerox slid 2.2% after the printer and copier maker matched second-quarter earnings estimate but lowered its full-year outlook, citing continued economic uncertainty.
SanDisk surged 13% as the flash memory maker's second-quarter earnings and revenue came in above analyst projections.
Freescale Semiconductor dropped 6.1% after the chip maker reported second-quarter results that topped estimates, but indicated that third-quarter revenue would be below current projections.
In deal-related stock moves, Fidelity Bancorp surged 64% after the company agreed to be acquired by WesBanco, which fell 4.9%, in a deal valued at $70.8 million.
In its initial public offering, security-technology company Palo Alto Networks surged 34% after priced above its expected range Thursday.
Write to Chris Dieterich at christopher.dieterich@dowjones.com
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