Stocks finished near session lows Friday afternoon as investors took profits in some of the recent high-flying technology outfits.
Losses in tech stocks dragged Nasdaq down by 37.09 points, or 1.89%, to 1,930.26. The Dow Jones industrial average fell 69.26 points, or 0.7%, to 9,768.68, despite gains in the drug components. The broader Standard & Poor's 500 index finished off 8.06 points, or 0.76%, at 1,050.35.
Among the biggest contributors to the market's decline were semiconductors and semicondustor equipment makers. Investment banks & brokerages also fell as more subpoenas were issued in relation to the mutual fund trading scandal, and there was cautious anticipation of a rumored major SEC enforcement action on Monday, according to Standard & Poor's MarketScope.
The latest data offered a mixed picture of economic recovery, sparking some investors to rotate out of tech sectors that have been strong lately. The Dow's technology members -- Intel (INTC), Hewlett-Packard (HPQ), and IBM (IBM) -- lost ground.
Drug stocks, however, showed strength on speculation that Congress will pass a prescription drugs benefits plan. There was also encouraging news that efforts to allow reimportation of pharmaceuticals are losing steam. Shares in Dow members Merck (MRK) and Johnson & Johnson (JNJ) rose. Pfizer (PFE) and Eli Lilly (LLY) also gained ground.
Several key economic updates came out Friday, including October producer price index, retail sales, industrial production, and a preliminary read on November Universiy of Michigan consumer sentiment.
U.S. consumer sentiment was stronger than expected, rising to 93.5 in November from 89.6 in October. Expectations surged to 87.6 from 83, while present conditions increased to 102.8 from 99.9.
Investors also had more earnings news to mull. Auto maker General Montors (GM) said it will take a fourth-quarter charge of about $1.2 billion before taxes to cover costs of employee payments it agreed upon with the United Auto Workers union.
PC maker Dell (DELL) reported "as expected" third-quarter earnings of 26 cents per share on revenues of $10.6 billion.
Coffeehouse giant Starbucks (SBUX) said Thursday after the market close that its profits for the fourth quarter rose 21% on strong sales of new drinks and its purchase card.
Department store Kohl's (KSS), which reported a sharp drop in sales earlier in the month, reported net income of $121.2 million, or 35 cents per share, for the third quarter, down from $133.4 million, or 39 cents per share, a year ago.
Monday brings more data -- on business inventories and the budget deficit. The Treasury is expected to report a $70.7 billion deficit. The deficit would outdo the $54.1 billion shortfall seen last October and would likely prompt another round of doom and gloom over the budget outlook.
Business inventories are expected to slip 0.1% in September following a 0.4% contraction in August. The dip should be led by the manufacturing sector, as factories trimmed stocks by 0.4%, while retail inventories are pegged to fall 0.1%.
Several companies are slated to report earnings Monday. They include Jo-Ann Stores (JAS), Lowe's Companies (LOW), Toys 'R' Us (TOY), and World Wrestling Entertainment (WWE).
Treasuries finished higher in a short-covering rally as the latest economic data had stock investors worried over the strength of economic recovery. "Largely solid data seemed to have little bearing on the bullish price action," says MMS International. The yield on the 10-year note settled at 4.23%.
In other data news Friday, the producer price index, a gauge of inflation, leapt 0.8% in October, compared with a 0.3% rise in September. Core wholesale prices, which excludes volatile food and energy, gained 0.5% in October, compared with an unchanged result previously. These numbers were well above consensus forecasts, says MMS International.
U.S. retail sales fell 0.3% in October following a revised 0.4% drop in September. Excluding autos, sales were up 0.2%. The headline retail sales data were a little weaker than expected.
European stock markets finished higher Friday with help from strength in drug stocks. London's Financial Times-Stock Exchange 100 index added 24 points, or 0.55%, to 4,397. In Paris, the CAC 40 gained 36.05 points, or 1.06%, to 3,448.6. Germany's DAX index added 31.81 points, or 0.84%, to 3,797.40.
Asian stock markets finished lower Friday. Japan's Nikkei 225 index shed 170.61 points, or 1.65%, to 10,167.06, led by losses in tech and Internet-related shares. Sluggish U.S. stocks overnight renewed concern about Japan's strength.
In Hong Kong, the Hang Seng index lost 24.04 points, or 0.20%, to finish at 12,203.53.