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NEW YORK (CNN/Money) -
Stocks tanked Thursday, falling for the third session in a row as concerns about slower-earnings growth combined with classic seasonal weakness to send the market lower.
The Dow Jones industrial average (down 115.03 to 10,229.95, Charts) lost 1.1 percent and the broader S&P 500 (down 12.48 to 1,178.90, Charts) index lost just over 1 percent. The Nasdaq composite (down 36.22 to 2,063.81, Charts) lost 1.7 percent.
"Some of the earnings forecasts haven't been good, and that's making people nervous that there could be a larger slowdown in profit growth," said Som Dasgupta, head of equity trading at PNC Advisors. "GM is also worrying people today."
General Motors (down $1.98 to $27.19, Research) slipped 6.8 percent on reports late Wednesday that the Securities and Exchange Commission had issued subpoenas regarding its pension-accounting and insurance practices.
"You're also seeing a classic October decline," Dasgupta said, referring to October's tendency to be a tough one for stocks. "After we get through the earnings, we should see stocks move higher."
After the close Thursday, Microsoft (Research) posted fiscal first-quarter earnings and revenue that rose from a year ago and topped estimates. However, the tech leader also issued a second-quarter earnings and revenue forecast that fell short of expectations, and shares fell 2 percent in extended-hours trading.
That sent futures lower. As of 5:30 p.m. ET, Nasdaq and S&P futures pointed to a modestly lower open Friday, when fair value is taken into account.
Friday morning brings earnings from Bristol-Myers Squibb (Research), Chevron (Research) and Avon Products (Research) among others.
Friday's big economic report of note is the preliminary read on gross domestic product growth in the third quarter. GDP is expected to have grown at a 3.5 percent annual rate, according to a consensus of economists surveyed by Briefing.com. GDP grew at a 3.3 percent annual rate in the second quarter.
The chain deflator, the GDP's inflation component, is expected to have risen to a 2.9 percent annual rate in the quarter from a 2.6 percent rate in the second quarter.
Shortly after the open, the University of Michigan releases its revised consumer sentiment index for October. The index is expected to be revised up to 76.2 from 75.4.
Tough week on Wall Street
Thursday was the third down session in a row for stocks.
"There's been a weaker tone lately," said Maria Fiorini Ramirez, president at Maria Fiorini Ramirez Inc. "Between earnings and long-term interest rates creeping up, there's not a lot out there that makes people want to be in the market right now."
Also weighing on sentiment was a report showing that durable goods orders fell in September after rising in August. The decline was steeper than what Wall Street economists were expecting.
In other economic news, new home sales rose in September, according to a government report released early Thursday, but the gain came short of economists' estimates.
Homebuilders slipped, sending the Dow Jones Home Construction (down $30.73 to $814.90, Research) index down by 3.6 percent.
Investors also remained uneasy about energy prices -- which rose Thursday -- and the series of events that have rocked Washington in the last few weeks, including Thursday's news that Harriet Miers has withdrawn her nomination to the Supreme Court.
What moved?
Declines were broad based, with 25 out of 30 Dow issues falling on the session. A variety of tech stocks also slumped on the day.
The influential chip sector slumped, knocking the Philadelphia Semiconductor (down 11.94 to 427.64, Charts) index, or the SOX, down 2.7 percent.
Alcatel (down $0.95 to $11.66, Research) tumbled after cutting its full-year profit target. That overshadowed the French telecom company's improved quarterly earnings.
Alcatel was one of many in the telecom and networking sectors that slid, sending the Amex Networking (down 7.15 to 218.98, Charts) index down 3.2 percent.
Exxon Mobil (down $0.60 to $55.60, Research) slipped after it reported earnings per share that rose from a year ago but missed analysts' estimates. In the morning, the stock gained as investors focused on Exxon's profit growth, up 75 percent from a year ago.
Other oil-service stocks fell too, knocking the Philadelphia Oil Service (Charts) index down by 2.5 percent.
Digital River (down $9.77 to $27.71, Research), an e-commerce outsourcing company, plunged 26 percent in unusually active Nasdaq trade after slashing 2006 forecasts late Wednesday. The company also reported higher-than-expected quarterly earnings that topped forecasts.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by almost three to one on volume of 1.78 billion shares. On the Nasdaq, decliners topped advancers by more than three to one as 1.74 billion shares changed hands.
U.S. light crude oil for December delivery jumped 43 cents to settle at $61.09 a barrel on the New York Mercantile Exchange, after sliding 2.5 percent on Wednesday.
Treasury prices bounced back after three down sessions that saw the benchmark 10-year note yield hit a seven-month high. The rise Thursday lowered the yield on the 10-year to 4.56 percent from 4.58 percent late Wednesday. Treasury prices and yields move in opposite directions.
The dollar slipped versus the euro and yen.
COMEX gold rose $2.60 to settle at $475.60 an ounce, gaining with other dollar-traded commodities.
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