On The Fly: Top stock stories for Friday

Stocks began the session in negative territory with the Dow and S&P leading the market lower. The Nasdaq was the strongest of the averages all day thanks in part to shares of Microsoft (MSFT) which hit an all-time high. The market was also subject to options expiration which occurs on the third Friday of each month and with it can cause volatility. The market saw its lows shortly after the open and spent the rest of the session clawing its way back toward positive ground. ECONOMIC NEWS: In the U.S., Baker Hughes reported the rig count is up 14 rigs from last week to 553, with oil rigs up 11, gas rigs up 3, and miscellaneous rigs unchanged at 2. In Canada, retail sales fell 0.1% in August. In Europe, Eurozone consumer confidence rose as expected to -8.0 points in October from -8.2 in September. COMPANY NEWS: AT&T (T) is in advanced talks to acquire Time Warner (TWX) and a deal could be reached as soon as this weekend, according to The Wall Street Journal, citing people familiar with the matter. The Journal's report follows Bloomberg's account yesterday that executives from both companies have met in recent weeks to discuss possible strategies, including a possible merger. Shares of AT&T slipped 3% after the news, while Time Warner's stock rose 7.8%... Shares of Microsoft gained 4.2% after the company reported better than expected quarterly results. The stock, which has hit a new high, is being helped by enthusiasm for progress in its cloud business being expressed by investors and analysts... Conversely, General Electric (GE) dropped fractionally after announcing weaker than expected third quarter revenue as slow economic growth continued to weigh, prompting the company to scale back expectations for revenue and profit for the full year... Shares of Reynolds American (RAI) have advanced more than 15% after the company received a non-binding proposal from British American Tobacco (BTI) to purchase the approximately 58% of the former's common stock that the latter does not currently own. MAJOR MOVERS: Among the notable gainers was Alkermes (ALKS), which advanced 27.8% after the company said its ALKS 5461 for the treatment of major depressive disorder in patients not helped by standard antidepressants met the main goal in a third late-stage trial. Also higher was PayPal (PYPL), which gained 10.1% after the company's third quarter revenue beat estimates. Following the earnings release, Stifel analyst Scott Devitt upgraded the stock to Buy, saying the company reported "solid" third quarter results and should deliver "stable consistent, and robust" growth going forward. Additionally, McDonald's (MCD) rose just over 3% after the company posted better than expected quarterly results, helped by the continued popularity of its all-day breakfast. Among the noteworthy losers was Skechers (SKX), which slipped 17.26% after its missed third quarter earnings and guidance. Following the announcement Citi analyst Corinna Van der Ghinst downgraded the stock to Neutral, saying visibility over the next 12 months is "challenging." Also lower was MGP Ingredients (MGPI), which slid 2.6% after the Kansas City Star and other local news outlets reported that the company's plant in Atchison, Kansas had suffered a chemical spill that prompted people to be told to avoid the area. INDEXES: The Dow fell 16.64, or 0.09%, to 18,145.71, the Nasdaq gained 15.57, or 0.3%, to 5,257.40, and the S&P 500 declined 0.18, or 0.01%, to 2,141.16.