Tech stocks notch a dismal week

/ Source: staff and news service reports

Stocks extended their recent slide Friday as nervousness about the upcoming earnings season overshadowed the latest positive economic news. Tech stocks were hit especially hard, with the Nasdaq composite index falling 1.4 percent, and a broad index of stock values fell to its lowest level in a month.

FOR THE WEEK, the tech-heavy Nasdaq shed 6 percent, its worst one-week loss in 17 months. Analysts said tech stocks were particularly vulnerable after their big run-up since March.

“Everyone’s in a wait-and-see mode on third-quarter earnings,” said Stephen Massocca, president of Pacific Growth Equities. “There’s a perception that stocks are overvalued, and that’s holding the market back.”

News about the economy was mixed, with a report of better-than-expected economic growth offset by a poor showing in consumer confidence.

The Dow Jones industrial average closed down 30.88, or 0.3 percent, to 9,313.08, after losing 81.55 Thursday.

The Nasdaq composite index fell 25.17 points to 1,792.07 following a loss of 26.46 the previous session. The Standard & Poor’s 500 index declined 6.41, or 0.6 percent, to 996.85, its first close below 1,000 since Aug. 27.

The Dow ended the week down 3.4 percent, its largest weekly loss in six months. For the week, the S&P 500 dropped 3.8 percent, its worst weekly percentage loss in eight months, or since the week ended Jan. 24, when the index fell 4.5 percent.

Stocks struggled to find direction early Friday but slipped later in the day, continuing a trend from the previous two trading sessions. Investors are questioning whether stocks rose have risen too high given lingering doubts about the economic recovery.

Those doubts were fanned Wednesday by OPEC’s announcement it would cut oil production. On Thursday, investors focused on a report showing a larger-than-expected drop in durable goods orders.

“We’re having a continuation of the consolidation that started five days ago,” said Alfred E. Goldman, chief market strategist, A.G. Edwards & Sons Inc. in St. Louis.

“I think we’re handling the profit-taking in a very positive fashion,” Goldman said. “We’re really just getting a moderate correction despite the magnitude of the previous rally.”

In a report released before the start of trading, the government said the economy grew at annual rate of 3.3 percent in the second quarter, better than expected.

The increase, which beat analysts expectations, was revised upward from an earlier 3.1 percent estimate, and may signal that the country is poised for a sustained rebound from the recession that technically ended in late 2001.

But that good news was tempered by the University of Michigan’s reading on consumer sentiment. That measure fell moderately below analysts’ expectations, in a sign of consumers continued concern about the weak job market.

Shannon Reid, a money manager with Evergreen Investments in Charlotte, N.C., said the market’s tone had been negative all week after finance ministers from the biggest industrialized countries put pressure on Japan and China not to manipulate their currencies to their advantage.

“I think that gave a market that had already had a big run an excuse to have a breather,” Reid said. “The bulls don’t feel it’s time to step in yet, so we haven’t seen much support.”

Nokia rose 19 cents, or 1 percent, to $15.26 on the New York Stock Exchange after the company announced a sweeping restructuring Friday.

Eastman Kodak fell 75 cents, or 3 percent, to $21.40, after the company said Thursday that it was slashing its dividend to focus resources on developing the digital photography market.

Dell rose 22 cents or 1 percent to $34.14 on the Nasdaq after the computer company announced Thursday it will enter the consumer electronics market.

Declining issues outnumbered advancers 2 to 1 on the New York Stock Exchange, where volume was moderate.

The Russell 2000 index, which tracks smaller company stocks, fell 9.78, or 2 percent, to 485.28.

Overseas, Japan’s Nikkei stock average finished Friday up 0.1 percent. In afternoon trading in Europe, France’s CAC-40 fell 0.4 percent, Britain’s FTSE 100 declined 1.1 percent and Germany’s DAX index fell 0.1 percent.

The Associated Press and Reuters contributed to this report.