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Disappointing earnings reports lead to a drop in the Dow

Kai Ryssdal Oct 19, 2012
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Disappointing earnings reports lead to a drop in the Dow

Kai Ryssdal Oct 19, 2012
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Cardiff Garcia from the blog FT Alphaville and and Catherine Rampell from the New York Times discuss the 200-point drop in the Dow today and the state of the markets.

“Well, there were a few profit reports that came out — we got numbers from GE, from McDonald’s, from Microsoft that were all kind of disappointing,” says Rampell. “So I have a feeling that investors got kind of spooked by what they were seeing on that front and otherwise extrapolate from the rest of the market.”

“Yeah, a little bit of perspective here: the market went up the first half of the week; it went down the second half of the week to about where we started, right? But I think Catherine’s right — probably what happened was driven by earnings reports,” says Garcia. “I think this is a result of a couple of things. One is that global growth appears to be slowing so American companies that sell things overseas aren’t selling as much as we’d hope. But another is that they’re also not able to cut costs the way they used to in years past, and in some ways, that’s actually a good thing — it means they’re not firing as many people. So it’s something to worry about if you’re a shareholder, but in terms of what it tells you about the U.S. economy, I think it’s fine.”

For more analysis on Google’s disappointing earnings report and an overall gut check of the economy, listen above.

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