Pre-holiday slide for stocks

NEW YORK (CNNMoney.com) -- Stocks fell in pre-holiday trading Friday after a report showing a surprise decline in durable goods orders overshadowed a tame inflation reading.

The Dow Jones industrial average (down 60.17 to 12,361.08, Charts) lost about 0.5 percent with less than an hour left in the session. The broader S&P 500 index (down 5.45 to 1,412.85, Charts) and the tech-heavy Nasdaq composite (down 10.03 to 2,405.82, Charts) posted slimmer losses.

Trading was light ahead of the holiday weekend, contributing to volatility. U.S. stock markets will close Monday for Christmas.

"When you have a limited audience like you do today and you'll have next week, there are more dramatic moves up and down," Alfred Goldman, chief market strategist at A.G. Edwards, said.

A report showing weakness in durable goods orders, an indicator of manufacturing activity, triggered losses.

The Commerce Department said orders for big-ticket items rose 1.9 percent in November. But excluding transportation, orders tumbled 1.1 percent.

The unexpected decline overshadowed a separate report offering a mild reading on inflation.

The inflation gauge of the Commerce Department's report on personal income and spending, known as the core PCE, was flat in December. (Full story)

Also on the economic front, the University of Michigan issued a final reading for its consumer sentiment index that showed confidence remained high in December. The reading is considered an indicator of consumer spending, which fuels about two-thirds of the nation's economic activity.

Volatility was high ahead of the holiday weekend. The CBOE Volatility index (up $0.64 to $11.17, Charts) climbed 6 percent.

On the 30-share Dow, 28 stocks declined and 2 advanced.

Elsewhere, Rupert Murdoch's News Corp. (Charts) agreed to exchange its controlling stake in DirecTV Group (Charts), along with other assets and cash, for Liberty Media's $11 billion stake in News Corp. Liberty (up $4.37 to $98.01, Charts) shares jumped 4 percent.

A slew of tech companies posted quarterly earnings late Wednesday.

Software company Red Hat (up $3.94 to $21.90, Charts) surged 20 percent after reporting upbeat earnings and issuing a robust forecast.

Qualcomm (down $0.45 to $38.09, Charts), a provider of microchips for mobile telephones, slipped 1 percent. The company lowered its quarterly profit outlook.

BlackBerry maker Research In Motion's (down $3.46 to $130.24, Charts) reported upbeat quarterly results and raised its guidance. But shares dipped along with the broad decline in tech stocks.

Market breadth was negative. On the New York Stock Exchange, decliners topped advancers by a margin of 5 to 3 on volume of 761 million shares. On the Nasdaq, losers beat winners by a margin of 4 to 3 as 1.06 billion shares changed hands.

U.S. light crude oil for February delivery fell 25 cents to $62.41 a barrel on the New York Mercantile Exchange, extending Thursday's more than $1 decline.

Treasury prices fell, raising the yield on the benchmark 10-year note to 4.62 percent from 4.54 percent late Thursday. Bond prices and yields move in opposite directions.

The dollar rose against the euro and the yen.

COMEX gold added 70 cents to $622.30 an ounce.

Stocks in Asia closed mostly higher, while major indexes in Europe finished lower.

More market news

More on investing