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Dow Ends Below 10,000 Amid Earnings Worry

Stocks declined Friday as disappointing results from Bank of America and General Electric eclipsed strong results from big techs.

Stocks were also hurt by a report showing a surprise drop in consumer sentiment.

After two straight finishes above 10,000, the Dow Jones Industrial Average shed 67.03, or 0.7 percent, finishing at 9,995.91.

Still, for the week, the blue-chip index gained more than 100 points, or 1.3 percent. This is the second straight week the Dow is up — it's gained more than 5 percent in that time.

The CBOE Volatility Index, widely considered the best gauge of fear in the market, continued to slide, ending the week below 21.

Energy stocks were the week's best performer, up more than 5 percent, as oil topped $78 a barrelamid recovery hopes. After energy stocks, the best-performing sectors were industrials and materials, showing, that, despite all the recovery talk, investors are still hedging their bets.

Financials were the worst performers this week. JPMorgan blew expectations out of the water with its results, setting the bar high for the rest of the sector. Wall Street's whisper numbers got a little out of hand, and traders punished the sector when it didn't live up to those whisper numbers.

Today's earnings from GE and Bank of America rattled investors' confidence in the earnings season.

General Electric , the parent of CNBC, beat analysts' earnings target but missed on revenue.

Bank of America also disappointed, reporting a wider-than-expected loss as an improvement at its Merrill Lynch investment-banking unit was offset by consumer-credit problems.

Bank of America made news late yesterday when it revealed that CEO Ken Lewis, who is retiring at year's end, has agreed to give up his salary and bonusfor2009.

Shares of both GE and Bank of America lost more than 4 percent.

The results from GE and Bank of America were a sharp contrast to results earlier in the week from Intel and JPMorgan , which topped forecasts and helped the Dow finish above 10,000 for two straight sessions.

It's been a topsy-turvy week for earnings, peppered with good reports and disappointments. Ending the week on disappointment raised some concern for the rest of the season but Peter Cardillo, chief market economist at Avalon Partners said don't read too much into it.

"The disappointing results from Bank of America and GE do not mean the whole earnings season will go sour, but it is raising a question mark among investors," Cardillo told Reuters.

What happened this week in the market and earnings and what does it mean for next week? Click on the video at left.

Techs rocked earnings, with three companies beating after the bell yesterday.

Googlebeat on both profit and revenue, and in fact logged its strongest sequential revenue growth in more than a year, as advertising began to improve. Shares rose more than 3 percent.

IBM topped expectations and raised its outlook as the company focused on higher-margin software and services. But shares fell as investors locked in some profits.

Advanced Micro Devices lost money during the quarter but beat on revenue. Shares fell more than 6 percent.

Most techs went down with the broader market, including IBM and AMD, which lost 5 percent and 7.3 percent, respectively. but Google rose 3.8 percent.

David Eiswert, of T. Rowe Price Associates, thinks large-cap tech stocks will reign in 2010.

"Mid to long-term, I think tech offers you innovation, it offers you globalization and those are really attractive, and at these valuations of an IBM, of a Google, especially the larger cap names, we think that's what next year's going to be about," Eiswert said on CNBC this week.

After its recent surge, gold marched in place this week, ending up just 0.3 percent at 1,051.50 an ounce. The dollar was still under pressure but eked out a 1-percent gain for the week against the euro.

In today's economic news: A gauge of consumer sentiment dropped to 69.4 in a mid-October reading from 73.5 at the end of September. Economists surveyed by Reuters had expected the measure to rise to 73.8.

And industrial production rose in September for a third straight month. The gauge rose 0.7 percent; economists surveyed had expected a more modest 0.2-percent increase.

Wal-Mart has thrown the gauntlet in its price war with Amazon : The discount giant slashed its price on new hardcovers, including Sarah Palin's "Going Rogue" and John Grisham's "Ford County," to $10 — and then $9. Amazon matched both price points. Shares of Wal-Mart gained 0.5 percent.

Microsoft was hit by pirates: A week before the official launch of its Windows 7 operating system, bootleg copies of the software were availableon the streets of China for less than $3 — a fraction of the list price, $320. Its shares lost 0.8 percent.

Volume was slightly below average, with 1.39 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, nearly 2 to 1.

— Reuters contributed to this report.

On Tap for Next Week:

MONDAY: Housing-market index; Earnings from Hasbro, Apple, Texas Instruments and Boston Scientific
TUESDAY: Housing starts; producer prices; Madoff sons hearing; report on college pricing; Fed's Plosser speaks; Earnings from Caterpillar, Coca-Cola, DuPont, Pfizer, United Technologies, Lockheed Martin, Regions Financial, SanDisk, Seagate, Yahoo
WEDNESDAY: Weekly mortgage apps; weekly crude inventories; Fed's beige book; Fed's Rosengren speaks; Earnings from Boeing, Eli Lilly, Wells Fargo, Altria, AMR, Continental, Morgan Stanley, USBancorp and eBay
THURSDAY: Weekly jobless claims; leading indicators; Fed's Rosengren, Lockhart and Dudley speak; Earnings from AT&T, Bristol-Myers, McDonald's, Merck, MMM, Travelers, UPS, Schering-Plough, Xerox, Amazon, AmEx, Braodcom and Capital One
FRIDAY: Fed chief Bernanke speaks; existing-home sales; Fed's Kohn speaks; Earnings from Microsoft, Honeywell and Ingersoll-Rand

Send comments to cindy.perman@nbcuni.com.

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