McDonald's Corp (MCD.N), the world's largest restaurant chain, reported weaker-than-expected net income and warned that full-year results would be "challenged" in the face of falling sales in Europe, its biggest market. Shares fell 2.6 percent to $97.68, weighing on the blue chip Dow index. McDonald's earnings came in a busy week of earnings reports, with about one-third of S&P 500 companies due to report, including Apple (AAPL.O) and entertainment provider Netflix Inc NFLX.O.. The S&P 500 index .SPX on Friday edged up to end at a second straight record high, while the Dow and Nasdaq stock gauges fell as disappointing earnings results from Microsoft (MSFT.O) and Google (GOOG.O) dragged on the market. "McDonald's (earnings) headlines were a little weak but I think we are still in the strong start of the earnings season," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio. "We might consolidate here a bit after the rally but we are not entering a correction or anything. The market is shaking off the bad news from Google and Microsoft already," and that shows the upward momentum is strong, Detrick said. The Dow Jones industrial average .DJI was down 12.59 points, or 0.08 percent, at 15,531.15. The Standard & Poor's 500 Index .SPX was down 0.23 points, or 0.01 percent, at 1,691.86. The Nasdaq Composite Index .IXIC was up 1.09 points, or 0.03 percent, at 3,588.70.

U.S.-listed shares of UBS (UBS.N) (UBSN.VX) rose 3.5 percent to $19.29 after the Swiss bank said its second-quarter profit beat forecasts despite a $920 million charge to settle a U.S. lawsuit and other matters.

In economic news, U.S. home resales unexpectedly fell in June after two straight months of hefty increases, but a surge in prices to a five-year high suggested the housing market recovery remained on course.

Kimberly-Clark Corp (KMB.N), best known for its Kleenex tissues, posted a higher-than-expected quarterly profit on Monday, as cost savings helped offset the negative impact of foreign exchange rates. But the stock fell more than 3 percent to $96.31 in early trade.

Halliburton Co (HAL.N), the world's second-largest oilfield services company, posted higher-than-expected earnings as it made more headway outside its home U.S. market. The stock was down 0.1 percent at $45.78.

Analysts' estimates for corporate earnings have been reduced so much that investors believe the targets for the most part should be easily beaten.

Through Friday, of the 104 companies in the S&P 500 that have reported earnings for the quarter, 65.4 percent have reported earnings above analyst expectations, while 51 percent have topped revenue estimates, according to Thomson Reuters data.

REUTERS