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Rough Day for Tech Sector

The Nasdaq drops 1.2%. Financial stocks are also weaker.

Updated from 4:48 p.m. EST

Stocks had a strong start Friday but the gains wouldn't hold, and the market closed lower amid a selloff in the tech and financial sectors.


Dow Jones Industrial Average

was off 56.80 points, or 0.45%, at 12,580.83, having been up by as many as 37 points earlier. The blue-chip index was pressured by a 2.6% decline in


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. Overall, 26 of the Dow's 30 components finished with losses.


S&P 500

was lower by 10.25 points, or 0.71%, at 1438.06. The

Nasdaq Composite

plunged 28.85 points, or 1.16%, to 2459.82.

Seeing losses of 3% or more were


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All told, the Dow finished a lackluster week lower by 72 points, or 0.6%. The Nasdaq slumped 16 points, or 0.6%, and the S&P 500 fell 10 points, or 0.7%.

Roughly 2.76 billion shares changed hands on the

New York Stock Exchange

. Decliners beat advancers by a 12-to-5 margin. Volume on the Nasdaq reached nearly 2.21 billion shares, with losers outpacing winners 2 to 1.

By sector, financials suffered some of the worst losses for the day. The S&P 500 Financial Sector Index lost 1%, and the Nasdaq Financial 100 sank 1%. Other losers included the Philadelphia Semiconductor Sector Index, down 1.4%, and the Philadelphia Housing Sector Index, off 1.5%.

The Nasdaq started selling off sharply in midsession, following news reports of comments by


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about price declines at its annual briefing with financial analysts.

Micron projected that the average price of NAND flash memory -- used in consumer electronics gadgets like MP3 players and cell phones -- would plummet 30% to 40% sequentially in the current quarter, according to a Reuters report. And the company doesn't see any major demand drivers on the horizon to soak up all the supply of flash chips flooding the market.

Micron shares closed down 2.6% to $12.56.

"Investors should also be aware that the stock market is overdue for a short-term correction," said Michael Sheldon, chief market strategist with Spencer Clarke. "However, barring a major unforeseen event that impacts the U.S. or global economy, 2007 is likely to end up with another year of moderate stock market gains."

The market also had to absorb midafternoon comments from Dallas

Federal Reserve

President Richard Fisher, who said the current direction of inflation was pleasing, but that he wouldn't rule out another rate hike "if inflationary winds gain the upper hand."

Before the session began, St. Louis Fed President William Poole said that "the inflation rate is likely to fall into a reasonable range this year." Poole warned that "if, however, core inflation seems to be settling at a rate above 2%, then such an outcome would be unacceptable to me."

In his speech, Poole also said that the housing market is still not out of the woods, adding that "at a minimum we can say that we do not have evidence as yet that home prices have stabilized."

TheStreet Recommends

Among stocks, the debut of

Fortress Investment Group


was one of the day's big events. Fortress priced its initial public offering Thursday evening at $18.50 a share, the top of its expected range.

Fortress finished its first trading session at $31 a share. Its IPO was the most eagerly anticipated deal since the



came to town back in November. That deal doubled at the opening and went on to post a 125% gain in its first day of trading.

Another key issue was the fourth-quarter earnings from


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, which swung to a profit of $40.9 million, or 30 cents a share, compared with a loss of $52.9 million, or 39 cents a share, last year. Revenue jumped 17% to $839.2 million. MasterCard's results beat the Thomson First Call consensus estimate of 17 cents a share on revenue of $826.9 million.

Additionally, the credit card outfit raised its quarterly dividend to 15 cents a share from 9 cents. After reaching a 52-week high of $118.07, euphoria faded and MasterCard shed $11.14, or 9.7%, to close at $103.60.

Shares of


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ended lower after the auto-parts maker said it will accept a $5.3 billion offer from billionaire investor Carl Icahn's

American Real Estate Partners

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. The deal values Lear at $36 a share. Shares slipped 1.7% to $39.39.

Staying in the auto sector, Deutsche Bank upgraded


(F) - Get Ford Motor Company Report


General Motors

(GM) - Get General Motors Company (GM) Report

. The firm upped each to buy from hold, citing the possibility that negotiations on health care could improve the automakers' ability to restructure.

Ford gained 18 cents, or 2.1%, to $8.73. GM jumped by $2.21, or 6.5%, to close at $36.01.



was up modestly after posting solid fourth-quarter numbers and setting a $1 billion buyback.

Coldwater Creek



BMC Software


were lower on weak earnings news.

In the absence of any economic data, Treasury prices lost ground. The 10-year note was down 13/32 in price and yielding 4.78%, and the 30-year bond was diving 1-2/32, yielding 4.86%.

Turning to commodities, energy prices were mostly higher on worries about production outages in North America. Oil added 18 cents to close at $59.89 a barrel, while gold tacked on $9.50 to $672.30 an ounce.

Stocks rose in Europe, where London's FTSE 100 was higher by 0.6% to 6383 and Frankfurt's Xetra DAX was up 0.5% at 6911. In Asia, Tokyo's Nikkei 225 rose 1.2% to 17,504, and Hong Kong's Hang Seng was down 0.3% to 20,677.