updated 7/28/2006 8:47:28 AM ET 2006-07-28T12:47:28

Wall Street fell modestly Thursday, as investors collected profits amid nervousness about the government’s second-quarter gross domestic product report. Concerns about another product delay at Microsoft Corp. weighed on the technology sector.

Major Market Indices

Robust earnings growth at major oil companies lifted stocks through most of the session, with Exxon Mobil Corp. posting the second-highest profit ever reported by a public U.S. company and Royal Dutch Shell PLC seeing a 40 percent jump in its income.

But the market resumed its recent erratic behavior as traders grew anxious about the Commerce Department’s GDP reading on Friday. Stronger-than-expected growth could bring more interest rate hikes, while a number below estimates might be a sign the economy is slowing quicker than expected; the uncertainty prompted investors to play it safe and take money off the table.

“To have leadership come from great earnings in the energy and automotive sectors is not sufficient enough to move the market materially higher,” said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. “I think what has investors concerned is what’s next for the economy and future rate hikes.”

Mixed economic data created more confusion for Wall Street. A bigger-than-forecast drop in new home sales stirred fears of an economic collapse, but an upswing in durable goods orders signaled persistently strong demand for manufactured products.

The Dow Jones industrial average had given up its earlier gains by the close and finished down 2.08 points, or 0.02 percent, after rising as much as 85 points earlier in the day. The Dow has barely budged since rising 230 points Monday and Tuesday.

The broader Standard & Poor’s 500-stock index finished Thursday down 5.20 points, or 0.41 percent, while the Nasdaq composite index slipped 15.99 points, or 0.77 percent.

Bonds wobbled, with the yield on the 10-year Treasury note edging up to 5.04 percent from 5.03 percent late Wednesday. The U.S. dollar tumbled against the Japanese yen; gold prices surged to more than $645 per ounce.

Crude oil futures posted more gains amid caution about the Middle East conflict and pipeline snags at Shell’s Nigerian operations.

Investors’ excitement over strong earnings dissipated as they awaited the advance GDP reading for hints about the economy’s health. Economic growth is forecast to slow to an annual rate of 3 percent from 5.6 percent in the first quarter.

“We just don’t have anything to focus on right now,” said Ryan Larson, senior equity trader at Voyageur Asset Management. “It’s a real slow afternoon in the summer. Unfortunately, there’s no one there to put money to work, and we trade lower on that.”

Sales of new homes in June retreated 3 percent to 1.13 million, below economists’ predictions of 1.16 million. Although a slowdown in the housing market has been expected, the sharp downturn stoked worries about whether prices were headed for a plunge.

However, orders for big-ticket manufactured items grew 3.1 percent in June after inching up 0.3 percent the previous month, the Commerce Department said. Commercial aircraft demand drove the increase, which topped estimates of 2.3 percent.

The Labor Department said first-time applications for jobless benefits dipped by 7,000 to 298,000 last week, compared with expectations for a 5,000 increase.

Tech stocks slumped as analysts weighed a Microsoft executive’s statement that the release of its new Vista operating system remains on schedule but could be delayed again if the product isn’t up to quality standards. Microsoft reversed course at midday and lost 50 cents to $23.87.

(MSNBC is a Microsoft-NBC joint venture.)

Upbeat earnings boosted the energy sector, but Exxon nonetheless finished down 13 cents at $66.47. Shell soared $1.01 to $70.51.

Bristol-Myers Squibb Co. said its earnings fell by a third last quarter and that it was the target of a criminal antitrust probe over a patent settlement with a generic competitor. Bristol-Myers slumped $1.95 to $24.04.

Boston Scientific Corp. rose 69 cents to $17.75 after the coronary stent maker attributed its steep quarterly loss to its recent acquisition of Guidant Corp., which boosted sales by more than 30 percent.

Overseas, Japan’s Nikkei stock average rallied 1.99 percent. Britain’s FTSE 100 added 0.28 percent, Germany’s DAX index gained 1.36 percent and France’s CAC-40 was higher by 1.18 percent.

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