NEW YORK (CNN/Money) -
Stocks slumped Friday, with the Dow falling to its lowest level in nearly 11 months, on fears about rising oil prices and the outlook for corporate profits.
The Dow Jones industrial average (down 107.95 to 9,757.81, Charts) lost 1.1 percent, closing at its lowest point since late November 2003.
The broader Standard & Poor's 500 (down 10.75 to 1,095.74, Charts) index lost around 1 percent and the Nasdaq composite (down 38.48 to 1,915.14, Charts) fell 2 percent.
For the week, the Dow and S&P 500 both declined, while the Nasdaq closed little changed.
A tech rally had propelled stocks Thursday, distracting investors from higher oil prices and weaker earnings forecasts.
But the rally evaporated Friday as oil surged and earnings from Microsoft, Amazon and others disappointed, sparking a big selloff.
"When crude is at new highs like this, that makes people nervous and gives them a reason to sell," said Todd Salamone, director of trading at Schaeffer's Investment Research.
U.S. light crude oil for December delivery jumped 68 cents to settle at $55.15 a barrel on the New York Mercantile Exchange.
"The earnings have been pretty good so far, but there's an ambiguity in the market about them, because you'll see Amazon or Microsoft disappointing and then others beating," said Hugh Johnson, chief investment officer at First Albany.
Earnings are currently on track to rise about 15 percent in the third quarter from the same period a year earlier. While that's good, it also falls short of the more than 20 percent year-over-year earnings the S&P 500 enjoyed over the last four quarters.
"The election is another element of ambiguity," Johnson added, "and oil remains the crucial variable."
Because of all the ambiguity, there is nothing to quell the jitters and move the markets higher, he added.
What moved?
Microsoft (down $0.82 to $27.74, Research) reported fiscal first-quarter earnings of 27 cents a share, up from a year earlier and two cents above forecasts. But the stock fell after the company issued revenue guidance for its fiscal second quarter that was short of estimates.
Amazon.com (down $4.87 to $34.60, Research) reported earnings of 17 cents a share, which was higher than a year ago but a penny shy of estimates. Sales guidance for the fourth quarter was in line but its outlook for sales next year was short of analysts' estimates and the stock fell early Friday.
One bright spot was Google (up $23.05 to $172.43, Research), which jumped more than 15 percent Friday, after issuing its first earnings report as a public company. That gave a lift to some other Internet shares, but had little impact on the broader tech sector.
The Internet search engine provider said earnings and revenue rose sharply from a year earlier. Results topped estimates on a revenue basis and sparked debate about whether they also topped estimates on an earnings-per-share basis.
Regardless, investors and analysts focused on the strong revenue. Prudential even went so far as to boost its price target on the stock to $200, from $130.
Among other movers, Broadcom (down $4.06 to $26.41, Research) sank on news that fourth-quarter revenue would tumble from the third quarter, due to order delays. The outlook overshadowed the chipmaker's third-quarter earnings, which beat Wall Street's recently reduced estimates.
Chipmaker Xilinx (down $1.61 to $28.76, Research) fell after saying that fiscal third-quarter revenue will fall two percent to six percent from the second quarter. The company also reported fiscal first-quarter earnings that rose from a year ago and met estimates.
A number of chips fell, pushing the Philadelphia Semiconductor (down 13.82 to 395.16, Charts) index, or the SOX, down 3.4 percent.
Ericsson (down $3.24 to $28.41, Research) shares tumbled after the No. 1 maker of cell phone networks said growth would slow in 2005. The cautious outlook distracted investors from the company's strong quarterly results.
Insurance stocks continued to slide. The sector has been under fire for the last week, since Eliot Spitzer sued Marsh & McLennan for alleged big-rigging, and ignited a broader probe into the way insurance is sold. In the latest development, Marsh's CEO was reportedly set to step down Friday, according to media reports.
Market breadth was negative. On the New York Stock Exchange, losers topped winners five to three as 1.47 billion shares changed hands. On the Nasdaq, decliners beat advancers two to one on volume of 1.74 billion shares.
Treasury prices rose, pushing the yield on the 10-year note down to 3.97 percent from 4 percent late Thursday. Treasury prices and yields move in the opposite direction.
In currency trading, the dollar inched lower versus the euro and yen.
COMEX gold settled at $425.60 an ounce, unchanged from Thursday.
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