Technology stocks led Wall Street lower Friday after Intel Corp.'s (INTC) disappointing mid-quarter update and blue chips fell as an uninspiring employment report failed to mitigate investors' concerns.

The technology-laced Nasdaq Composite Index (search) tumbled 28.95 points, or 1.55 percent, at 1,844.48. The Dow Jones industrial average (search) dropped 30.08 points, or 0.29 percent, at 10,260.20. The Standard & Poor's 500 Index (search) fell 4.68 points, or 0.42 percent, at 1,113.63.

For the week, the Dow gained 0.64 percent, the S&P rose 0.54 percent, but Nasdaq slid 0.95 percent.

Intel dropped more than 7 percent after the company cut its revenue and profit-margin forecasts for the third quarter Thursday, citing weakened demand. The gloom spread to other chip makers, and the Philadelphia Semiconductor Index (search) of 18 tech stocks fell more than 5 percent to a 14-month low.

Other disappointments from telecommunications equipment maker 3Com Corp. (COMS), microchip maker Altera Corp. (ALTR), and microchip technology company Integrated Device Technology Inc. (IDTI) added to the gloom.

"The Intel news was obviously a huge disappointment for technology names," said Brian Williamson, vice president for equity trading at The Boston Co. Asset Management.

"But the Dow is only off a touch, which is encouraging. The Dow's being held up by some good moves in some of the majors outside of technology. It could be that people are moving out of tech into other sectors."

One day after a sharp drop in crude oil sparked a major stock rally, a barrel of crude was quoted at $43.99, down 7 cents, on the New York Mercantile Exchange (search).

Investors were satisfied with — but not impressed by — the Labor Department's (search) latest reading on unemployment, which fell to 5.4 percent from 5.5 percent in July, and the 144,000 jobs created in August was close to the 150,000 Wall Street had expected.

"They were solid numbers, they were not explosive to the upside, but they were definitely solid, and that would be enough to keep the market flat or up had Intel not lowered their estimates the way they did," said Craig Cummings, a partner at Cantor Fitzgerald.

Combined with falling unemployment and a 0.3 percent increase in hourly earnings, the overall jobs picture was somewhat improved over the tepid growth seen this summer. However, analysts have said stronger growth would be needed to assure investors that the economic recovery was still on firm footing.

The Institute for Supply Management's services index, like its manufacturing report earlier in the week, dropped sharply in August, falling to 58.2 from July's reading of 64.8, reflecting a drop in consumer spending due to employment concerns and oil prices. The ISM noted that the service sector continued to grow, however.

The economy will likely need an additional boost in consumer spending, which — at least in the high-tech sector — doesn't appear forthcoming.

Intel's woes spread to other high-tech stocks, with rival Advanced Micro Devices Inc. (AMD) fell 77 cents to $10.90, Hewlett-Packard Co. (HPQ) slipped 31 cents to $17.70 and Microsoft Corp. (MSFT) was down 51 cents at $27.11.HP, Microsoft and Intel are all Dow components, and their fortunes reflect the health of not only tech stocks, but of the industrial sector as well.

Southwest Airlines Inc. dropped 72 cents to $14.25 despite reporting that its passenger traffic in August rose 11.3 percent from the previous year. The airline's passenger load per plane rose to 75.1 percent, up from 73.2 percent a year ago.

Elsewhere, shares of US Airways Group Inc. (UAIR) rose 6.64 percent to $2.77 after the pilots union said it is working on a new labor contract and may soon consider a tentative agreement to help avoid a second bankruptcy filing.

Insurance stocks could be in focus as some 2.5 million people were urged to leave their homes as Hurricane Frances (search) bears down on the U.S. Southeast. The S&P Property and Casualty Insurance index was up 0.6 percent.

Shares of Kmart Holding Corp. (KMRT) rose 3.4 percent to $82.08 after it said it would sell 45 stores for $524 million to Sears, Roebuck & Co. Sears was off 15 cents to $39.84

Pharmaceutical giant and Dow component Pfizer Inc. (PFE) was down 15 cents at $32.55 after  announcing it would pay $430 million to settle 171,611 lawsuits against a subsidiary that claimed injury from insulation products. Pfizer said it will take a $229 million charge in the third quarter for the settlement.

Hotel and casino operator Mandalay Resort Group (MBG), which is subject to pending acquisition by MGM Mirage Inc. (MGG), saw a 38 percent jump in quarterly profits, despite rising employee health-care costs. Mandalay nonetheless fell 7 cents to $67.78.

Southwest Airlines Inc. (LUV) dropped 72 cents to $14.25 despite reporting that its passenger traffic in August rose 11.3 percent from the previous year. The airline's passenger load per plane rose to 75.1 percent, up from 73.2 percent a year ago.

Due to the Republican National Convention and the usual slowdown in trading before Labor Day, volume on the major markets was extremely low during the week.

The Russell 2000 index of smaller companies was down 3.54, or 0.6 percent, at 556.24.

Overseas, Japan's Nikkei stock average tumbled 1.2 percent. In Europe, Britain's FTSE 100 closed up 0.7 percent, while Germany's DAX index and France's CAC-40 both climbed 0.9 percent.

Reuters and the Associated Press contributed to this report.