NEW YORK (Reuters) - Technology stocks fell on Friday and drove the Nasdaq down 1 percent on disappointing earnings from Google (GOOG.O) and Microsoft(MSFT.O), while Citigroup’s smaller-than-expected loss pushed up the Dow and helped keep the broader market near the unchanged mark.
Nevertheless, the S&P 500 and Nasdaq snapped a six-week losing streak. The Dow snapped four weeks of losses as financial stocks rallied after the government outlined a plan to shore up mortgage finance companies Fannie Mae FNM.N and Freddie Mac FRE.N and the SEC announced rules to curb short selling.
Reassuring quarterly results from key banks also fed the week’s rally, with Citigroup capping a series of closely watched scorecards from Wells Fargo (WFC.N) and JPMorgan Chase & Co (JPM.N) that beat analysts’ estimates.
On top of that, the biggest weekly drop ever in oil prices also gave investors a renewed appetite for equities.
Despite their weekly gain, tech stocks ended the week with a thud. Google’s stock fell almost 10 percent, its biggest one-day percentage drop since it went public in 2004, and Microsoft shares slid 6 percent, a day after the tech bellwethers’ quarterly results fell short of expectations.
“The government’s plan to provide funding for Fannie and Freddie and the SEC’s short-selling rule put a floor, for now, under financials. But you’ll start to see investors increasingly differentiate between ‘the haves and have nots’ in financials,” said Michael Sheldon, chief market strategist at RDM Financial, in Westport, Connecticut.
The Nasdaq Composite Index .IXIC, meanwhile, shed 29.52 points, or 1.28 percent, to close at 2,282.78.
For the week, the Dow rose 3.5 percent, its best week in three months. The S&P 500 rose 1.7 percent, while the Nasdaq was up 1.9 percent.
Citi’s results were a sharp contrast to a larger-than-expected quarterly loss from Merrill Lynch MER.N. For most of the session, Merrill’s stock was lower, but it eked out a gain in the last hour of trading. Merrill ended up 0.6 percent at $30.91.
Regional banks, many of which report earnings next week, were among the top sector drags on the S&P 500, suggesting investor worry that the credit crisis has not run its course for some of the less diversified, smaller banks. The S&P Regional Banks Index .GSPBNKS fell 0.8 percent.
Citigroup jumped 7.7 percent to $19.35 after the Dow component reported a smaller-than-expected $2.5 billion loss and said it would keep cutting costs and getting rid of risky or poorly performing assets.
A wider-than-expected loss by chip maker Advanced Micro Devices AMD.N, whose shares fell 12.3 percent to $4.65, added to concerns about the outlook for the U.S. technology sector.
Google’s stock slid 9.8 percent to $481.32 while Microsoft shares shed 6 percent to $25.86, both in Nasdaq trading.
Dow component International Business Machines Corp (IBM.N) bucked the glum technology earnings trend, also boosting the Dow. IBM’s shares rose 2.7 percent to $129.89 on the New York Stock Exchange.
With earnings season now in full flow, analysts expect second-quarter S&P 500 earnings to drop 17.1 percent. If second-quarter earnings end up being lower, it will be the fourth consecutive quarter of negative growth for the S&P 500, the longest losing streak in six years, according to Thomson Reuters proprietary research.
Oil prices fell on Friday, helping to cushion the market’s decline. High fuel costs have been adding to concerns about consumer spending and corporate profits. U.S. crude for August delivery settled at $128.88 a barrel, down 41 cents.
Trading was moderate on the New York Stock Exchange, with about 1.71 billion shares changing hands, below last year’s estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.28 billion shares traded, above last year’s daily average of 2.17 billion.
Advancing stocks outnumbered declining ones on the NYSE by about 17 to 15, while decliners beat advancers on the Nasdaq by about 4 to 3.
Reporting by Kristina Cooke; Editing by Jan Paschal