Nasdaq Skid Hits Fourth Week

Weak economic data hurts stocks Friday, but blue-chips still gain for the second week in a row.
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Updated from 4:05 p.m. EST

Stocks closed lower Friday, with the

Nasdaq

leading the declines mostly because of a report showing a sharp decline in February consumer confidence.

The

Dow

closed down 66.22 points, or 0.6%, at 10,627.85; the

S&P 500

was off 6.3 points, or 0.6%, at 1145.81; and the Nasdaq shed 20.05 points, or 1%, to 2053.56.

Volume was 1.3 billion shares on the

New York Stock Exchange

, while 1.77 billion shares traded hands on the Nasdaq. Losers beat winners by a margin of about 2 to 1 on both exchanges.

The Nasdaq had its fourth consecutive losing week, down 10.45 points, or 0.5%, while the Dow closed the week up 34.82 points, or 0.3%, its second straight winning week. The S&P 500 was up about 3 points from the prior week, also its second consecutive gain.

The 10-year Treasury note was at 99 20/32, yielding 4.05%; the bond market closed at 2 p.m. because of the upcoming holiday weekend. The dollar was weaker after a larger-than-expected trade deficit in December. One euro was worth $1.2893, while the dollar was fetching 105.45 Japanese yen.

Analysts had expected Friday's preliminary reading of the University of Michigan's consumer sentiment index to show a small decline, but the reading came in much lower at 93.1, compared with the 103.3 consensus. January's reading was 103.8.

Larry Wachtel, market analyst at Wachovia Securities, is not surprised the markets were down Friday. He noted that the bull market is now almost 12 months old and that it's only the 11th time in 70 years that the market has been up this much without a correction.

"The market is extending itself up there right at the tip," said Wachtel. "Anything that comes along is hurtful," he said, referring to the soft consumer sentiment number.

"If

economic numbers come out bad, it's goodbye, Charlie," he said. The market "is priced to perfection, and any imperfection becomes larger than life."

Additionally, with the upcoming three-day holiday weekend, people tend to leave early, Wachtel noted. "The upside is stale -- the markets can't move ostensibly higher," he concluded.

Stocks fell because of the weaker-than-expected consumer sentiment survey and a lack of other market-moving economic news following Thursday's declines, agreed Giri Cherukuri, a trader at Oak Brook Investments. "The

consumer sentiment survey showed a weakness, a lack of strength in the economy," he said. "That's the major reason for today."

But Cherukuri thinks the survey won't have a lasting impact. "It's just another

economic indicator," he said.

In other economic news, the December trade deficit hit $42.5 billion, capping a record year. Economists expected a gap of $40 billion, compared with a deficit of $38 billion in the prior month. Another government report showed that import prices rose 1.3%, reflecting the weak dollar and high crude oil prices, while export prices increased 0.5% in January.

Among the companies leading the tech declines were

Intel

(INTC) - Get Report

, down 60 cents, or 2%, at $30.14;

Xilinx

(XLNX) - Get Report

, off 95 cents, or 2.2%, to $41.51; and

Credence Systems

(CMOS)

, which dropped 85 cents, or 6.3%, at $12.75.

Meanwhile,

Dell

(DELL) - Get Report

had said after the bell Thursday that it earned 29 cents a share in its most recent quarter, which beat analysts' consensus by a penny. Revenue increased 18% to $11.5 billion, which also met the consensus forecast. Shares of the company were upgraded by Raymond James, and shares rose 98 cents, or 2.9%, to $34.55.

Shares of

Disney

(DIS) - Get Report

fell $1.08, or 3.9%, to $26.92, two days after

Comcast

(CMCSA) - Get Report

launched a $54 billion hostile takeover. The stock had risen to a 52-week high of $28.41 on Thursday, from around $23 in early February.

In Friday corporate news, the

Securities and Exchange Commission

has asked the Nasdaq stock market to investigate Thursday's trading in shares of

ImClone Systems

(IMCL)

. Trading had been halted ahead of the company's announcement that its cancer drug was approved by the FDA.

In the five minutes before the halt, however, the stock fell to a low of $33.05 from $42.11, and volume during that time was 684,420 shares, about 25% of all shares traded Thursday. The exchange called it a "routine half" and said no Nasdaq system errors played a role in any late trade. Shares of the company were up $9.79, or 29%, at $43.79.

In earnings,

Hillenbrand

(HB)

said it had earnings from continuing operations of 89 cents a share, which beat the consensus for 82 cents a share. Revenue rose 17.6%. Shares closed up $5.64, or 8.7%, at $70.01.

In research, Goldman Sachs downgraded shares of

GlaxoSmithKline

(GSK) - Get Report

to in line from outperform, and Merrill Lynch upgraded shares of

Analog Devices

(ADI) - Get Report

to buy from neutral. Shares of GlaxoSmithKline closed down 87 cents, or 2%, at $42.52, while shares of Analog Devices ended up $1.66, or 3.4%, at $50.65.

Markets overseas closed mostly mixed, with London's FTSE 100 up 0.8% at 4412 and Germany's Xetra DAX down 1.6% at 4057.05 Japan's Nikkei closed 0.9% higher at 10,557.7, and Hong Kong's Hang Seng gained 0.8% to 13,739.8.

The markets will be closed on Monday for the Presidents Day holiday. Look for earnings reports on Tuesday from

Agilent Technologies

(A) - Get Report

and

Teva Pharmaceuticals

(TEVA) - Get Report

.

In Tuesday economic news, industrial production and capacity utilization reports for January will be released. Industrial production is expected to rise 0.7% from the prior month's 0.1% increase, while the factory use rate is seen at 72.6%, compared with 75.8% in December.