NEW YORK (CNN/Money) - U.S. stock losses widened at midday Thursday after a small plane hit a high-rise building in Milan, Italy, setting it on fire. But the decline was stemmed somewhat amid reports that Italian officials said the plane reported technical problems before hitting the building.

The markets were already under pressure Thursday after aerospace weakness took its toll on the Dow Jones industrial average while selling in wireless and chips held back the Nasdaq composite.

At 12:32 p.m. ET, the Dow industrials lost 67.60 to 10,153.32; it was down as much as 163 points become recovering. The Nasdaq composite gave back 17.08 to 1,793.78. The Standard & Poor's 500 index fell 5.96 to 1,120.13.

The Milan incident was particularly unsettling to airline stocks, as the Dow transportation average dropped 1.6 percent.

The Dow's aerospace stocks were dragging on the indicator after aerospace parts maker Honeywell International (HON: down $2.00 to $38.46, Research, Estimates), which reported lower first-quarter earnings in line with estimates, said it was interested in pursuing several acquisition opportunities and was responsible for more in asbestos claims than it previously stated. Boeing (BA: down $2.49 to $42.88, Research, Estimates), which hurt the Dow on Wednesday with its lower-than-expected earnings, and United Technologies (UTX: down $2.12 to $67.68, Research, Estimates) also declined.

"It's continued fallout from Boeing's earnings release and comments coming out of the conference calls for both Boeing and Honeywell," said Christopher Mecray, an aerospace and defense analyst at Deutsche Bank Securities. "People are beginning to realize that these companies are expensive relative to earnings. You also have a lack of improvement in some of the airline names that have reported recently weighing on these companies, too."

Countering the negative news was strength in computer hardware maker IBM (IBM: up $3.07 to $87.88, Research, Estimates) after it reported lower first quarter earnings late Wednesday that met recently reduced estimates. Executives said that, looking forward, the company should be able to meet Wall Street targets for the remainder of the year.

But Finnish cell phone maker Nokia (NOK: down $2.37 to $18.26, Research, Estimates) warned that 2002 sales would miss estimates due to continued weak demand for handsets and networks. The dour forecast made a bigger impression than the company's first-quarter profit, which was weaker than a year earlier, but still better than what analysts expected.

"Earnings news is the name of the game," said Michael Carty, principal with New Millennium Advisors. "This is the first week of the really intense reports. Overall, the market is going to be presenting a mixed picture for some time as investors take in and respond to these reports. We're seeing that today (Thursday)."

Markets in Europe were mixed in late trade, while Asian markets closed higher. The dollar was weaker against the yen and little changed versus the euro. Light crude oil futures rose 48 cents to $25.86 a barrel in New York.

Treasurys were little changed, with the ten-year note yield at 5.23 percent.

Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by 9-to-7 as 750 million shares traded. On the Nasdaq, losers led winners 4-to-3 as 1.02 billion shares changed hands.

Shares of Apple Computer (AAPL: down $0.86 to $25.25, Research, Estimates) fell after the company issued a mixed outlook, saying that it sees pressure in the fiscal third-quarter partly due to higher component costs and that results should be flat to slightly higher than the second quarter. The company also reported weaker fiscal second-quarter results that topped estimates.

Chip equipment maker Advanced Micro Devices (AMD: down $2.00 to $12.82, Research, Estimates) was lower after the company was downgraded by a number of brokerages after it warned that second-quarter revenue would fall 5 to 10 percent, which it attributed to seasonal factors. Intel's (INTC: down $0.43 to $30.21, Research, Estimates) main rival also reported a narrower-than-expected first-quarter loss, down from a profit one year earlier.

Among other big names reporting results, drugmaker Merck (MRK: up $1.02 to $56.07, Research, Estimates) and regional phone service provider SBC Communications (SBC: down $0.95 to $33.55, Research, Estimates) all met estimates, while fast-food retailer McDonald's (MCD: up $1.37 to $28.53, Research, Estimates) and data storage maker EMC (EMC: up $0.50 to $10.90, Research, Estimates) topped expectations.

After the close of trade, No. 1 computer software maker Microsoft (MSFT: down $0.17 to $56.46, Research, Estimates) is expected to report a profit of 51 cents a share, up from 44 cents a share earned in the same period one-year earlier.

In the day's economic news, the number of new claims for jobless benefits rose slightly last week to 445,000 from a revised 444,000 the previous week, reflecting the continued pressure on the labor market.

The Conference Board's index of leading economic indicators, a measure of 10 forward-looking indicators, rose less than expected. The index was up 0.1 percent in March, when analysts were expecting a gain of 0.3 percent, compared with an unchanged result in February.