NEW YORK (CNN/Money) -
Stocks slumped Friday, at the end of an otherwise strong month for the market, as investors took profits amid a weaker-than-expected read on GDP, rising oil prices and Treasury bond yields.
The Dow Jones industrial average (down 64.64 to 10,640.91, Charts) and the Nasdaq composite (down 13.61 to 2,184.83, Charts) both lost around 0.6 percent.
The Standard & Poor's 500 (down 9.54 to 1,234.18, Charts) index lost around 0.75 percent.
Treasury prices slumped, boosting the yields, and the dollar was mixed versus other major currencies.
For the month of July, all three indexes posted solid gains: the Dow rose 3.6 percent, the Nasdaq rose 6.3 percent and the S&P 500 rose 3.6 percent.
But at the end of a strong month, the major gauges struggled. For the week, the Dow lost a few points, the S&P 500 ended little changed and the Nasdaq ended higher.
Gross domestic product grew at a 3.4 percent annual rate in the second quarter, the government said Friday, down from a 3.8 percent rate in the first quarter and shy of forecasts for a 3.5 percent growth rate.
The chain deflator index, the GDP report's inflation component, rose a smaller-than-expected 2.4 percent. But the full-year 2004 and first-quarter 2005 readings were revised upward, and that may have sparked some worries about inflation, said Jim Dunigan, chief investment officer at PNC Advisors.
"The prospect of slightly higher inflation might be making stock investors a bit nervous," Dunigan said. "I think stocks are also likely reacting to the higher oil prices today."
However, some encouraging signs about the strength of the economy in the second half of 2005 were buried lower in the report, Dunigan said. He cited positive indicators for the manufacturing sector -- essentially seconded by the morning's other manufacturing report.
Next week, the focus will turn to jobs, with the July employment report due Friday.
U.S. light crude oil for September delivery rose 63 cents to settle at $60.57 a barrel on the New York Mercantile Exchange.
Treasury prices slumped, raising the yield on the 10-year note to 4.28 percent from 4.19 percent late Thursday. Treasury prices and yields move in opposite directions.
A broad rally Thursday had pushed the Dow to a new 4-month high and the S&P and Nasdaq to new 4-year highs, and some consolidation after the market's recent advance was also affecting investors Friday.
On the move
Among stock movers, Symantec (down $1.84 to $21.95, Research) tumbled 7.7 percent in active Nasdaq trade after warning that fiscal year 2006 revenue will miss earlier forecasts, due to the impact of the recent rise in the dollar versus the euro.
The company, known for its Norton anti-virus software, also reported higher fiscal first-quarter earnings that beat estimates.
Synaptics (down $5.17 to $15.85, Research) slumped 24.6 percent in active trading after warning that fiscal first-quarter revenue would fall 9 to 10 percent from the fourth quarter. The maker of touch pad technology products also reported higher fiscal fourth-quarter earnings.
A number of tech stocks weakened, with the software and networking sectors hit the hardest.
Wendy's International (up $6.43 to $51.70, Research), the fast-food chain, jumped more than 14 percent after reporting higher-than-expected earnings and saying it would spin off part of its Tim Horton's coffee-and-doughnut franchise into an initial public offering.
That overshadowed the fast food chain's warning that full-year earnings would miss forecasts.
Among other movers, homebuilders suffered a bout of consolidation after a strong recent run. The Dow Jones Home Construction (down $23.94 to $1,090.82, Research) index fell 2.2 percent.
Market breadth was negative and volume was light. On the New York Stock Exchange, decliners beat advancers by just over 9 to 7 on volume of 1.39 billion shares. On the Nasdaq, losers topped winners 8 to 7 on volume of 1.59 billion shares.
Manufacturing in the Midwest region continued to expand in July, according to the release of the Chicago PMI, shortly after the start of trading. The index rose to 63.5 from 53.6 in June, topping forecasts for a rise to 55.5.
In currency trading, the dollar gained versus the euro and the yen.
COMEX gold rose $2.50 to settle at $435.80 an ounce.