Stock index futures have tumbled following earnings reports that were released after hours, largely due to poor earnings reports from Merrill Lynch, Google, Microsoft, and IBM. Moody's even downgraded Merrill's credit rating after the news. Microsoft beat street expectations, but showed disappointing conversion of unexpectedly-high revenues into profits. The Dow is down 80 points from its closing high just minutes before, which closed nearly at the sessions highs.
Google, after having passed from quarter to quarter with strong profits ever since its IPO, is now suddenly showing vulnerability, with a stinging and disappointing earnings report. Within moments of its news release, Google was trading lower by almost 10%, giving up almost $50/share. Google had seemed like an impenetrable fortress of profits, but now, this disappointment seems to create the specter that perhaps technology stocks aren't the tower of strength during tough times that was once thought. Tech titan IBM's earnings only made matters worse for the eroding perception of the tech sector. AMD's earnings also reinforced the same erosion idea. Even technology is now showing some signs of stress.
