Blue chips take earnings hit

NEW YORK (CNNMoney.com) -- Stocks fell Friday, with the Dow Jones industrial average down more than 100 points the day after it closed over the 14,000 mark for the first time ever, as a big miss from Caterpillar hit blue chips and techs slumped under a spate of disappointing earnings news.

The Dow (down 121.45 to 13,878.96, Charts) lost 135 points, or nearly 1 percent, to fall below 14,000. The broader S&P 500 (down 14.38 to 1,538.70, Charts) fell 0.9 percent while the tech-heavy Nasdaq (down 32.35 to 2,687.69, Charts) slid 1.2 percent.

Stocks rallied Thursday, pushing the Dow, a blue-chip barometer that tracks 30 large companies, to its highest finish ever.

But a big miss from Dow component Caterpillar dashed hopes of another record setting day Friday.

The heavy equipment maker said its net profit fell 21 percent and posted earnings of $1.24 a share, versus estimates for $1.49 a share. Caterpillar (down $8.17 to $78.81, Charts, Fortune 500) shares slid over 9 percent.

Lackluster earnings in the tech sector also weighed on stocks.

Google (down $33.93 to $514.66, Charts, Fortune 500) reported earnings late Thursday that missed Wall Street's estimates even as its quarterly sales soared. The earnings miss - only the second since the Internet search firm went public in 2004 - rattled investors who have grown accustomed to solid results from the company. Google shares tumbled 6 percent.

Swedish firm Ericsson, the biggest maker of cell phone network equipment, also reported earnings that fell short of analysts' expectations early Friday. Ericsson (down $2.24 to $39.85, Charts) shares fell 5 percent.

Elsewhere, chipmaker AMD (up $0.02 to $15.80, Charts, Fortune 500) posted a jump in quarterly sales, although it reported a loss as its ongoing price war with Intel (Charts, Fortune 500) pressured its bottom line.

Rival Microsoft (down $0.60 to $30.91, Charts, Fortune 500) said its net income and revenue rose during the quarter. Strong sales of its Vista operating system helped offset charges related to the company's Xbox game console.

The Dow has set a record close in five out of the last six sessions. Thursday investors said upbeat earnings from companies such as IBM (Charts, Fortune 500), Honeywell International Inc. (Charts, Fortune 500) and Bank of America (Charts, Fortune 500) helped lift the benchmark index.

But the stock market rally belies fears about the wider economy. In the first quarter of 2007 the economy grew by just 0.7 percent, well below normal.

And on Friday the dollar hit a record low against the euro and declined verses the yen on fears weakness in the U.S. housing sector could crimp consumer spending, further weakening economic growth.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 4.94 percent from 5.01 percent late Thursday. Bond prices and yeilds move in opposite directions.

Overseas, major Asian markets finished the session higher on Wall Street's record day Thursday, but European stocks slipped by midday as the earnings news rolled in.

Oil prices edged lower, with U.S. light crude for August delivery down 2 cents to $75.90 a barrel on the New York mercantile Exchange. Oil is near its all-time trading high of $78.40 hit last July.

Market breadth was negitive. Losers beat winners by more than 2 to 1 on volume of 596 million shares on the New York Stock Exchange. on the Nasdaq, decliners topped advancers more than 3 to 1 on volume of 642 million shares.

COMEX gold for August gained $4.70 to $682.80.