Wall Street sinks for third day

By Caroline Valetkevitch

NEW YORK (Reuters) - Stocks fell for a third session on Friday after a disappointing outlook from Qualcomm Inc triggered more weakness in technology shares and helped send the Nasdaq down to its biggest weekly point loss since the September 11, 2001, attacks.

The wireless technology developer late Thursday forecast 2008 earnings and revenue below analysts' expectations, a day after Cisco Systems Inc warned about demand from its customers in the banking sector.

Adding to the negative tone, Fannie Mae, the largest source of mortgage financing in the United States, posted a third-quarter net loss that was double its loss from a year ago. Its shares ended the session down 1.6 percent at $49.00, after earlier dropping 10.6 percent to a fresh 52-week low at $44.54.

And Wachovia Corp, the fourth-largest U.S. bank, shook up financial markets some more by reporting a potential $1.7 billion loss on mortgage-related debt. Wachovia's stock fell more than 5 percent to a 52-week low at $38.05, but then rebounded to finish the day up 0.9 percent at $40.65.

The week's disappointing news from tech companies sparked concern that fallout from the credit crisis was hurting demand from key customers. Technology until recently had been a bright spot for the market.

"It has seemed for a couple of days here we've been in a correction mode. Today certainly furthers that feeling," said Tim Ghriskey, chief investment officer of Solaris Asset Management in Bedford Hills, New York.

"While technology has been leading the market recently, it's a volatile sector, and you can't forget that. With negative demand visibility looming, it's probably going to be tough for technology to lead the market in the near term," he sad.

For the week, the Nasdaq lost 6.5 percent -- or 182 points. The Dow dropped 4.1 percent and the S&P 500 declined 3.7 percent.