Updated from 4:08 p.m. EDT
Tech shares sold off Friday as
earnings-related plunge drowned out a solid reading on U.S. economic growth.
finished with a loss of 22.38 points, or 0.95%, at 2322.57. The
Dow Jones Industrial Average
, of which Microsoft is a component, was lower by 15.37 points, or 0.14%, to 11,367.14.
kept the blue-chip index from falling more. The stocks finished higher after Prudential Equity upgraded the banking sector, which also boosted the Philadelphia/KBW Bank Sector index by 1.9%.
reversed its early weakness and tacked on 0.89 point, or 0.07%, to 1310.61.
As for Microsoft, it lost $3.10, or 11.4%, to close at $24.15, after earlier touching a 52-week low of $24. Volume was extremely heavy. With 587 million shares changing hands, trading in Microsoft accounted for more than one-fifthof the Nasdaq's total volume.
About 1.79 billion shares traded on the
New York Stock Exchange
, with advancers beating decliners by a 10-to-7 margin. Trading volume on the Nasdaq was 2.57 billion shares, with advancers narrowly outpacing decliners 8 to 7.
With Microsoft taking a hit, the Dow Jones Software index slumped 4.2%, and the selloff was also extending to other parts of the technology universe. The Nasdaq Computer index finished down 2.7%, and the Amex Computer Tech index fell 3.2%.
"There was a lot of profit-taking and rotation going on today," said Paul Mendelsohn, chief investment strategist with Windham Financial. "The market is recognizing that without major new products from Microsoft, they're on hold for the time being. That delay, pushing their Vista progam into 2007, affected earnings and it was reflected in the market today."
Taking a backseat to the Microsoft news were the latest economic numbers. The Commerce Department said its advance reading showed the U.S. economy grew at an annual rate of 4.8% in the first quarter, in line with economists' expectations. The chain deflator -- a key inflation measure -- came in at 3.3%, higher than the estimated 2.7%.
"Anything above 5% would have weighed on the bond market," said Peter Cardillo, chief market analyst with SW Bach & Co. "However, anything in the 5% range has already been discounted by the market."
To view Gregg Greenberg's video take on today's market, click here
Art Hogan, chief market analyst with Jefferies, said the GDP number wouldn't be expected to move the market unless the number was well above or below the consensus estimate. "It's a lagging number that will have two revisions," he said. "There were no major surprises. Economic data will still move this market, but this isn't one of them."
Ian Shepherdson, chief economist with High Frequency Economics, added that "on the face of it, these are very
Stocks and bonds rose Thursday after Fed Chairman Ben Bernanke said he and his colleagues would consider pausing their two-year-old rate-tightening campaign to let economic data catch up with reality. Markets interpreted the statement as lowering the odds that fed funds will go to 5.25% when the Fed meets in June.
Had the GDP report shown that the economy was expanding faster than expected, traders might have changed their minds. Many experts are already anticipating a quarter-point increase in the fed funds target rate to 5% when Fed policymakers meet in May.
The Dow began trading Friday at a fresh six-year high, pushed up Thursday by Bernanke and 3% gains in
For the month of April, the Dow rose 20 points, or 0.2%, while the S&P 500 climbed 16 points, or 1.2%. The Nasdaq lost ground for the month, losing 17 points or 0.7%, as disappointing results from Microsoft,
and Intel offset
Three other economic reports were also on the docket Friday. The Labor Department said U.S. employment costs rose 0.6% in the first quarter, below estimates of a 0.9% gain. Additionally, the University of Michigan's consumer sentiment index fell to 87.4 in late April from 89.2 earlier in the month, coming in below expectations. Finally, the Chicago purchasing managers index fell to 57.2% in April from 60.4% in March, also below estimates.
The 10-year Treasury bond was up 2/32 in price to yield 5.06%, and the dollar fell against the yen and euro.
Oil spiked higher. The June crude contract gained 91 cents to finish at $71.88 a barrel in Nymex floor trading. Since topping out above $75 a week ago, oil prices had fallen in four straight sessions, reflecting perceptions of weakening gasoline demand and the Bush administration's decision to curtail additions to the strategic oil reserve. Crude prices finished 5.8% higher for the month of April.
However, the main downward pressure was Microsoft, which reported a slightly weaker-than-expected 16% rise in third-quarter earnings and warned that investment in its Xbox video game machine would hurt results through the year. Microsoft earned 31 cents a share before items on $10.9 billion in sales for the quarter, missing estimates.
Per-share earnings in the June quarter will be about 30 cents, the company said, compared to expectations of 34 cents. Revenue will range from $11.5 billion to $11.7 billion, the company said; Wall Street was looking for $11.6 billion. For the year, the company sees earnings of $1.36 to $1.41 a share, compared with estimates of $1.53 a share.
A key supplier to the semiconductor industry,
, beat estimates Thursday, saying third-quarter adjusted earnings were 63 cents a share -- 6 cents better than estimates. At $518 million, sales also beat forecasts. Still, the stock was off $1, or 2%, to close at $48.16.
, which contracts the manufacture of electronic products, said fourth-quarter earnings fell 42% from a year ago on flat sales. Adjusted earnings of 16 cents a share were a penny shy of estimates. Flextronics was lower by 11 cents, or 1%, to $11.36.
Outside of technology,
posted first-quarter earnings of $4 billion, or $1.80 a share, up from $2.68 billion, or $1.28 a share, last year. The Thomson First Call consensus was for EPS of $1.78. Revenue rose to $54.62 billion, up from $41.6 billion a year ago. Chevron rose $1.04, or 1.7%, to $61.02.
said first-quarter earnings rose 4% from a year ago on solid results in its life division. Genworth affirmed full-year guidance for earnings of $2.65 to $2.75 a share. Genworth lost 26 cents, or 0.8%, to $33.20.
posted third-quarter net income of $14.7 million, or 17 cents a share, down 32% from a year ago. Revenue declined to $250.3 million from $252.8 million last year. Analysts were looking for earnings of 16 cents a share on revenue of $251.6 million. Shares finished down 8 cents, or 0.5%, at $14.89.
( CEG) quarterly earnings fell 6% to $113.9 million, or 63 cents a share, reflecting charges. At 70 cents a share, adjusted earnings were 5 cents ahead of estimates, although the company affirmed full-year guidance that currently trails the Wall Street consensus. Constellation was higher by 50 cents, or 0.9%, to close at $54.92.
Markets abroad were lower, with London's FTSE 100 off 0.6% to 6023 and Germany's Xetra DAX losing 1% to 6010. In Asia, Japan's Nikkei fell 1.2% overnight to 16,906, while Hong Kong's Hang Seng fell 0.5% to 16,661.