THE MARKETS Markets declined for most of the week on disappointing third quarter earnings re ports, with the

technology sector hardest hit. On Friday, the 25th anniversary o f 1987 s stock market crash (known as Black Monday)[1], trading was mostly downbeat as investors digested a string of disappointing earnings reports. In spite of th is, markets staged a brief comeback in the last hours of trading to close mixed. For the week, the S&P gained 0.32%, the Dow gained 0.11%, and the Nasdaq fell 1 .26%.[2] Overall this earnings season, Q3 profits have managed to come in just a shade ov er the doom and gloom estimates. However, the bad news is that top line revenue is much worse than forecasted. One of the big disappointments this week was Goog le (GOOG), which missed its revenue forecasts for the first time because of its struggling Motorola division and drove a tech selloff on Friday. Market stalwart s GE (GE) and McDonald s (MCD) also turned in downbeat reports, pushing shares of bo th companies lower.[3] With about one-third of S&P 500 companies reporting in, a solid 65% have beaten profit estimates, while just 42% have managed to beat re venue forecasts. This repeats the performance we saw in the second quarter, whic h shows that companies are learning to do more with less while dealing with chal lenging business conditions.[4]Not all the earnings news is grim though; banks a nd consumer discretionary companies such as luxury stores and hotels are expecte d to report the best growth. Banks were given a boost by Fed actions, and, despi te the tough economy, luxury retailers and hotel chains are doing well as wealth y consumers continue to spend.[5] Next week, analysts will turn their attention to two big economic reports on Fri day the GDP report and consumer sentiment. With remaining earnings reports likely to show more of the same, investors will be looking at the GDP report to see whe ther the Fed s QE3 activities are giving the economy the boost it needs. Although we can hope for some solid economic performance, there is a good chance the rest o f October will be turbulent for markets.