Drops in GE, Worries Over Europe Drag Down U.S. Stocks

NEW YORK (AP) -
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(AP Photo/Mark Lennihan, File)

U.S. stocks are down Friday as industrial companies slide. General Electric slumped after the company issued a weak forecast. Most other industries are also lower, including technology companies, which have soared during a 10-day winning streak. European stocks fell and European government bond prices rose after a report said the European Central Bank will make a decision about reducing its economic stimulus in October.

KEEPING SCORE: The Standard & Poor’s 500 index lost 3 points, or 0.1 percent, to 2,470 as of 12:15 p.m. Eastern time. The Dow Jones Industrial Average sank 52 points, or 0.2 percent, to 21,559. The Nasdaq composite lost 7 points, or 0.1 percent, to 6,383. The Russell 2000 index of smaller-company stocks dipped 4 points, or 0.3 percent, to 1,438. All four indexes remained near record highs.

POWER DOWN: General Electric tumbled after the company disappointed investors by saying it expects to reach only the low end of its annual profit forecast. GE is projecting earnings of $1.60 to $1.70 per share and analysts expected $1.62 per share, according to FactSet. The company said its power unit struggled in the second quarter and low oil prices are also hurting its business.

GE stock fell 76 cents, or 2.8 percent, to $25.93. It’s down 18 percent this year. Also falling was oilfield services company Baker Hughes, which is mostly owned by GE after it combined its business with GE’s oil and gas unit this month. Its stock shed $1.09, or 3.1 percent, to $33.89.

EUROPE: European stock indexes sank and bond prices rose, sending yields lower, after Reuters reported that the European Central Bank will consider paring back its stimulus programs in late October. Over the last few weeks, investors have focused on the bank and what it will do as the European economy continues to improve. The ECB has helped prop up the European economy and stock markets by buying government bonds and keeping interest rates at zero, and investors are nervous about what will happen as its policies change.

ECB President Mario Draghi said Thursday that the bank hasn’t even set a date for considering changes. Investors were somewhat relieved by that, but it was undercut by Friday’s developments. The German DAX lost 1.7 percent and France’s CAC 40 shed 1.6 percent. The FTSE 100 in Britain shed 0.5 percent.

TECH BACK ON TOP: Software giant Microsoft’s fourth-quarter profit and sales surpassed Wall Street estimates. The company posted another round of strong results from its cloud-computing business, including its Azure platform. Its stock dipped 42 cents to $73.80 on Friday.

Also falling was Alliance Data Systems, which manages loyalty and rewards programs. It lost $2.83, or 1.2 percent, to $235.79. Chipmaker Texas Instruments gave up $1.16, or 1.4 percent, to $81.54, and e-commerce company eBay fell 80 cents, or 2.2 percent, to $36.38.

Technology stocks are coming off a 10-day winning streak, their longest in more than a year. The S&P 500 technology index has climbed more than 6 percent over that time, which brought that index and the Nasdaq composite to record highs. The rally was assisted by the weakening dollar, which helps sales and earnings overseas. Investors also bet that technology companies would have another round of strong quarterly earnings.

LOOKING SNAPPY: Uniform-rentals company Cintas came out ahead of analyst estimates in its fiscal fourth quarter, and it forecast a much larger annual profit than investors had expected. The stock jumped $9.76, or 7.7 percent, to $136.54.

FOOD SCARE: Chipotle Mexican Grill fell to its lowest price in more than four years as the company once again had to deal with reports of customers getting sick. Health officials said Wednesday that one person who reported eating at a northern Virginia Chipotle tested positive for norovirus. Another 60 people who said they ate there have also gotten sick, although authorities say they have not yet confirmed a link.

Chipotle dropped $7.56, or 2.1 percent, to $348.49. The stock has fallen 12 percent this week, and it’s lost more than half its value since October 2015 as the restaurant chain dealt with the fallout of an E. coli outbreak that sent its sales plunging.

ENERGY: Benchmark U.S. crude lost 93 cents, or 2 percent, to $45.99 a barrel in New York. Brent crude, the standard for international oil prices, shed 91 cents, or 1.8 percent, to $48.39 a barrel in London. That dragged energy companies lower.

IN THE MONEY: Financial companies did relatively well after some solid quarterly reports. Credit-card issuer Capital One Financial leaped $6.78, or 8.4 percent, to $87.79 after it beat Wall Street estimates in the second quarter. E-Trade Financial gained $1.91, or 4.8 percent, to $41.52 and Moody’s added $4.28, or 3.4 percent, to $131.45.

BONDS: Bond prices rose. The yield on the 10-year Treasury note fell to 2.23 percent from 2.26 percent.

CURRENCIES: The dollar slid to 111.19 yen from 111.99 yen. The euro rose to $1.1657 from $1.1626.

ASIA: The Nikkei 225 of Japan slipped 0.2 percent and South Korea’s Kospi rose 0.3 percent. Hong Kong’s Hang Seng inched down less than 0.1 percent to 26,729.08.