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Expectations run
high for earningsThe Dow Jones falls, led by a
2.6 percent drop in McDonald's
The Dow Jones Industrial Average fell, led by shares of McDonald's Corp. after Chief Executive Officer James Cantalupo died of an apparent heart attack. Technology shares rose, pushing the Nasdaq Composite Index higher for the first day in five.
About a third of the companies in the Standard & Poor's 500 Index report earnings this week, and profits are rising faster than forecast. Still, stock prices may already reflect that growth, according to investors such as Chris Matlock.
"The market's incorporated a lot of the good news," said Matlock, whose Lighthouse Opportunity Fund has returned 55 percent in the past year, double that of the S&P 500. "A lot of investors aren't surprised by what they're seeing. We're being cautious."
The Dow average lost 14.12, or 0.1 percent, to 10,437.85, for its first drop in three days. The Nasdaq increased 24.69, or 1.2 percent, to 2020.43. The S&P 500 added 1.23, or 0.1 percent, to 1135.84. Computer-related shares contributed the most to the gain.
The price of the Treasury's 10-year note closed down 1/4 point, while its yield rose to 4.37 percent from 4.34 percent Friday. Two-year Treasury notes fell 116 point and yielded 2.03 percent, up from 2 percent Friday.
About the same number of stocks rose and fell on the New York Stock Exchange. Some 1.19 billion shares changed hands on the Big Board, 19 percent less than the three-month daily average.
Companies reporting results this week include Pfizer Inc., the world's largest drugmaker, tomorrow and Microsoft Corp., the biggest software maker, on Thursday.
With 101 companies in the benchmark having reported, first-quarter earnings jumped 19.2 percent, according to Thomson Financial. Profits are beating analyst estimates, on average, by 6.8 percentage points, or more than double the historic average, Thomson said.
The S&P 500 climbed 45 percent from its 2003 low to its rally high on Feb. 11. Since then, the benchmark has fallen 1.9 percent. It's dropped five of the last six weeks.
McDonald's, the world's largest restaurant chain, lost 71 cents to $26.75. The 2.6 percent decline was the biggest in the Dow. Cantalupo, who came out of retirement and revived sales in 16 months, died of an apparent heart attack in Orlando, Fla. Improvement in same-store sales prompted a 54 percent gain in shares last year after three years of decline.
President and Chief Operating Officer Charlie Bell, 43, was named chief executive. Directors also nominated Andrew J. McKenna, 74, the board's presiding director, for non-executive chairman.
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