NEW YORK (CNN/Money) -
A technology-led selloff pummeled the Nasdaq and hurt the broader market Friday, as investors bailed out of a number of sectors, despite upbeat earnings from IBM and others.
The Nasdaq composite (down 29.56 to 1,883.15, Charts) lost more than 1.5 percent, the Standard & Poor's 500 (down 5.30 to 1,101.39, Charts) index lost 0.5 percent and the Dow Jones industrial average (down 23.38 to 10,139.78, Charts) lost 0.2 percent.
For the week, all three indexes also closed lower. The Nasdaq composite lost 3.2 percent, the S&P 500 lost 1 percent and the Dow lost 0.7 percent.
For the S&P 500, It was the fourth weekly close in a row that gone down, the third in a row for the Dow industrials and the second in a row for the Nasdaq
Solid earnings from IBM boosted that stock but did little for the rest of the market, amid a rash of other corporate news, some upbeat, some discouraging. Lackluster trading took a turn for the negative in the late morning, led by tech losses, and escalated from there.
"I think there's a real lack of commitment in the market right now from both institutional and individual investors," said Joseph Battipaglia, chief stock strategist at Ryan, Beck & Co.
"This earnings season, instead of getting a ripple effect on positive news, you're seeing that particular company's stock react, but very little spillover, like with IBM today," Battipaglia said. "The negative news has tended to spill over to the rest of that sector, and in some cases, the broader market."
Next week brings a batch of big name earnings, including 3M, General Motors, Merck, Amazon.com and Microsoft. (For a look at these and other key earnings in the week ahead, click here.) Next week is very light on economic reports with nothing is expected until Tuesday, when several kinds of data on the housing market are due.
Longer term, the market is moving toward a key inflection point, said Tim Heekin, head of stock trading at Thomas Weisel Partners. He says that a lot of the work the market has been doing on the downside over the last six months is nearly done. While he doubts there's a big rally in store this year, he sees the market starting to move again to the higher end of the range.
IBM impresses, but ...
IBM (IBM: Research, Estimates) reported earnings late Thursday of $1.16 a share, 4 cents more than expected and up from 97 cents a year earlier, on revenue that was short of expectations. The company also said that 2004 earnings and sales are on track to meet analysts' consensus targets. Shares had initially risen more than 2 percent, but closed the session just 0.3 percent higher.
"I think the reaction to IBM has been positive, but the semis are continuing to act horribly, and that's weighing on the market and in particular, the Nasdaq," said Heekin.
Chip leader Intel (INTC: down $0.42 to $22.73, Research, Estimates) fell 1.8 percent. The Philadelphia Semiconductor index (down 8.07 to 410.46, Charts), or the SOX, fell 1.9 percent.
On the New York Stock Exchange, Texas Instruments (TXN: down $0.72 to $21.14, Research, Estimates) lost over 3 percent after Lehman Brothers downgraded it to "equal weight" from "overweight."
Online DVD rental service Netflix (NFLX: down $8.98 to $23.02, Research, Estimates) plunged 28 percent in active Nasdaq trading after reporting earnings of 11 cents per share. This is up from 8 cents a year earlier but two cents short of expectations on revenue that grew from a year earlier; it was roughly in line with estimates. Investors may have also been reacting to the higher rate of cancellations in the second quarter than the first, which stemmed from a price hike for Netflix' service.
Shares of chipmaker PMC-Sierra (PMCS: down $1.29 to $10.46, Research, Estimates) lost 11 percent after the company issued a third-quarter revenue forecast in the midpoint of its range and beneath analysts' estimates. That overshadowed the company's second-quarter earnings of 8 cents a share, which met estimates and reversed a loss from a year earlier.
Oracle (ORCL: down $0.50 to $10.22, Research, Estimates) also lost 4.7 percent and topped the Nasdaq's most-actives list.
A standout gainer on the Nasdaq was Dell (DELL: up $0.55 to $35.42, Research, Estimates), which added 1.6 percent after its boosted its quarterly profit outlook early Friday. The personal computer maker said it expects to have earned 31 cents in the second quarter, compared to an earlier projection of 29 cents, which is what Wall Street analysts are currently expecting. The company also earned 29 cents in the same quarter a year ago.
Shares of Martha Stewart Living Omnimedia (MSO: up $3.17 to $11.81, Research, Estimates) rallied nearly 37 percent in very active NYSE trade after its founder and namesake, Martha Stewart, received a lighter-than-anticipated jail term following her conviction for lying about her sale of ImClone (IMCL: down $2.88 to $77.01, Research, Estimates) shares in 2001. (For CNN/Money's special "The Verdict on Martha," click here.)
Dow component Johnson & Johnson (JNJ: up $1.45 to $56.80, Research, Estimates) added 2.6 percent, benefiting from the fallout surrounding one of its rivals in the drug-delivering stent market, Boston Scientific.
Shares of Boston Scientific (BSX: down $3.09 to $37.40, Research, Estimates) were halted for most of the session following a morning report that Brigham & Women's Hospital had pulled the company's stent from its shelves following the company's recall of the devices two weeks ago. Near the close, the drugmaker said it was expanding its recall, a move that would hit its second-quarter earnings. Shares reopened near the close and tumbled more than 7 percent.
Market breadth was mixed. On the New York Stock Exchange, advancers edged decliners by a slim margin as 1.44 billion shares changed hands. On the Nasdaq, losers beat winners by more than two to one as 1.78 billion shares traded.
Inflation mild, consumer sentiment light
Morning reports showed that U.S. consumer prices inched up higher than expected in June, but the core rate added a more modest amount, which seemed to further temper concerns about inflation.
The Consumer Price Index (CPI) rose 0.3 percent, after rising 0.6 percent in May. Economists expected a rise of 0.2 percent. The "core" CPI, which eliminates volatile food and energy prices, rose 0.1 percent in June, after going up 0.2 percent in May. Economists thought it would rise 0.2 percent in June as well.
Less upbeat was the University of Michigan's first read on consumer sentiment. Released just after the open, it rose to 96 from 95.6 in June, short of a rise to 97 that economists surveyed by Briefing.com were expecting.
Treasury prices rallied, pushing the 10-year note's yield down to 4.36 percent from 4.48 late Thursday. The dollar fell versus the yen and euro.
NYMEX light sweet crude oil futures added 37 cents to settle at $41.30 a barrel. Oil stocks also gained, with Dow component Exxon Mobil (XOM: up $0.51 to $45.83, Research, Estimates) adding 1.1 percent.
Among other commodities markets, COMEX gold added $2.40 to settle at $406.80 an ounce.