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Stocks Regain Some Losses, But Close Down 2% for the Week

Dan Berman
Hot Stock Minute

Stocks ended a rough week on a relatively positive note. The Nasdaq led the day gaining 1.25%, and the S&P 500 rose 0.87%. The Dow managed to end the day flat despite General Electric (GE) and IBM (IBM) weighing heavily to the downside in wake of their earnings reports. All three major indexes closed the week lower by over 2%.

General Electric (GE) fell 4% despite beating earnings estimates. The company posted profits of 39-cents a share, compared to expectations of 35-cents. That's an increase of 16% from a year ago. Revenues also rose slightly to $35 billion, topping the $34.5 billion which analysts had expected. The company cited strength in sales of oil and gas drilling equipment. It also benefited from the sale of its remaining stake in NBCUniversal. The company said weakness in Europe limited its headway in sales of power and water equipment.

IBM (IBM) tumbled 8% after a rare earnings miss reported yesterday after the bell. This is big blue's first quarterly miss since 2005. The company earned $3.00 a share versus an expected $3.05, and issued a full-year outlook that was below estimates. IBM says it plans to spend $1 billion in the near future to trim its staff.

McDonald's (MCD) fell 2% on the release of its earnings report this morning. The world's largest burger chain reported profits excluding items of $1.26 a share. That's up from $1.23 a year ago, but missed expectations by a penny. The company says its business has been hurt weaker international sales. Domestically, it says consumers appear to be dining out less. Late last year, the company saw monthly sales decline for the first time in ten years. Since then it has increased advertising and tried to focus more on health-conscious customers.

Meanwhile, McDonald's spinoff Chipotle (CMG), rose over 11% on its earnings released after the bell yesterday. It posted profits of $2.45 a share compared with estimates of $2.13. You may recall, fund manager Jeffrey Gundlach sent shares tumbling more than 3% last week when he joked that a gourmet burrito is an oxymoron. Shares of Chipotle are still well off their 52-week high of $439.

Dell (DELL) fell nearly 4% on a new twist in the fight to take the company private. Blackstone Group has withdrawn its bid to buy the PC maker. The private equity firm had been trying to top a $24.4 billion bid by company founder Michael Dell and Silver Lake. But it lost interest citing the decline in PC sales. Activist investor Carl Icahn remains in talks with Dell, hoping to spearhead a better offer. Earlier this week he agreed to cap his stake in the company in exchange for the right to talk with other shareholders.

Blackstone made another splash, taking SeaWorld (SEAS) public again. Shares climbing 25% in its debut trading day. Blackstone offered 26-million shares at $27 apiece. It acquired SeaWorld from Anheuser Busch InBev back in 2009 for $2.3 billion.

Perhaps the day's biggest gainer was Vertex Pharmaceuticals (VRTX). Shares closed 60% higher. Vertex says its experimental drug for cystic fibrosis improved lung function in adults in a mid-stage trial. The new drug was tested in combination with an existing one also made by the company. The advance puts the stock at its highest price since October of 2000.