NEW YORK – Stocks slumped Friday as disappointing business forecasts from companies like eBay and Sun prompted investors to lock in gains from this week's run-up and dismiss upbeat data on housing and consumer confidence.
The blue-chip Dow Jones industrials (search) lost 69.93 points, or 0.71 percent, to 9,721.79. The broad Standard & Poor's 500 (search) fell 10.75 points, or 1.02 percent, to 1,039.32. The technology-packed Nasdaq Composite Index (search) dropped 37.78 points, or 1.94 percent, to 1,912.36.
The Dow rose 0.49 percent and the S&P 500 added 0.12 percent for the week, notching their third straight week of gains. The Nasdaq eased 0.15 percent for the week after two consecutive up weeks.
"We have a market that is consolidating gains of the last couple of weeks," said Frederic Dickson, market strategist at D.A. Davidson & Co. "There did not seem to be any overwhelming positive corporate surprises to lift investors' expectations."
The major market gauges earlier this week hit levels not seen since early 2002 on the back of generally strong corporate earnings, but investors are growing concerned that much of the positive news has already been priced into the market.
"The marketplace is a little too sanguine, and expectation levels might have to be tempered going forward," said Stephen Massocca, president of Pacific Growth Equities.
This week was one of the busiest of the third-quarter earnings season, and results have generally landed in line with expectations. But investors had been hoping that companies would also point to strong growth in the quarters ahead to help justify further gains.
Ebay (EBAY) was one of the biggest losers in the S&P 500 after it disappointed investors with a lower-than-expected 2004 profit forecast. Its shares fell $2.64, or 4.6 percent, to $54.86.
Bermuda-based insurer XL Capital Ltd. (XL) added more pressure to the market after it slashed its third-quarter profit forecast, citing losses on its reinsurance business. Its stock tumbled $6.03, or 7.6 percent, to $73.37.
Network computer maker Sun Microsystems Inc. (SUNW) posted a wider quarterly loss as weak demand for its servers and tough competition caused sales to fall for the 10th straight quarter. Shares dropped 7 cents, or 1.9 percent, to $3.56.
Broadcom Corp. (BRCM) sank $2.84, or 8.7 percent, to $29.84. The networking technology firm offered a bullish forecast, but investors sold the stock to book gains from a run-up to 52-week highs this week.
DoubleClick (DCLK) plunged $2.98 to $9.26 after the online advertising company gave an outlook for its fourth quarter performance that missed Wall Street's estimates.
Ahold (AHO), the Dutch-based global food retailer, saw its U.S.-listed shares drop 50 cents to $9.56 after the company offered a grim outlook for its business, the first time it has discussed performance since a recent accounting scandal.
Gainers included Micron Technology Inc. (MU), which edged up 2 cents to $12.85 despite a downgrade by a UBS analyst.
Investors were largely unmoved by data showing that U.S. consumer confidence improved in October, as measured by the University of Michigan's mid-month index of consumer sentiment. The index rose to 89.4 in October, beating economists' forecasts of a rise to 88.0.
Meanwhile, government data showed U.S. housing starts rose unexpectedly in September, a clear signal the housing market remains strong, as low mortgage interest rates keep their allure for home buyers.
Groundbreaking for new homes jumped 3.4 percent to a seasonally adjusted annual rate of 1.888 million units in the month, beating analysts' forecast of 1.82 million.
Investors usually pay close attention to the number of new housing units under construction as it offers a guide on home builders' confidence they can sell homes and suggests a likely follow-on surge in consumer goods spending.
Declining stocks trounced advancers by a ratio of about 11 to 5 on the New York Stock Exchange and Nasdaq. About 1.3 billion shares changed hands on the Big Board and more than 1.7 billion on Nasdaq in moderate trading.
The Russell 2000 index, which tracks smaller company stocks, fell 9.28, or 1.8 percent, to 520.36.
Overseas, Japan's Nikkei stock average finished up 0.1 percent. In Europe, France's CAC-40 fell 0.1 percent, Britain's FTSE 100 rose 0.1 percent and Germany's DAX index slid 1.7 percent.
Reuters and the Associated Press contributed to this report.