NEW YORK (CNNfn) - The Nasdaq composite index tumbled for the fourth time in six sessions Friday, falling to a five-week low after disappointing financial results from Oracle Corp. renewed fears of slowing corporate profit growth ahead.
Technology bellwether Oracle said applications software sales rose 42 percent in its latest quarter, below expectations. Oracle's earnings report, though mostly positive, spooked a market worried about whether technology firms can deliver strong enough earnings to justify their steep stock prices.
"It's a defensive market right now," said John Forelli, senior vice president at Independence Investment Advisors. "People are worried about valuations."
The Dow Jones industrial average also fell, closing below 11,000 for the first time in more than a month. Gains in Procter & Gamble and Exxon Mobil could not offset by losses in Dow tech components Intel and Hewlett-Packard. A government report showing zero inflation at the consumer level was ignored.
 Friday's declines capped Wall Street's second straight losing week. With September half over, the stock market is doing what it historically does this month: fall.
The Nasdaq slid 78.62 points, or 2 percent, to 3,835.24, falling 3.8 percent on the week. The decline brings the index's September loss to nearly 9 percent and marks its lowest close since Aug. 11. The Dow, meanwhile, fell 160.47 to 10,927.00, its first close below 11,000 since Aug. 10. The index fell 2.7 percent over the last five days And the S&P 500 lost 15.08 to 1,465.79, bringing its weekly decline to 1.9 percent. The Dow, Nasdaq and S&P are lower on the year.
Independence Investment Advisors' Forelli sees the market drifting until investors believe the Federal Reserve will cut interest rates, something no analyst forecasts anytime soon.
"It's a little like telling my four-year-old son to fill out his Christmas list on the Fourth of July," Doug Sowerby, senior portfolio manager at Loomis Sayles, told CNNfn's market coverage.
 Forelli expects that the uncertainty ahead of the presidential elections and third quarter financial results limiting any major gains.
More stocks fell than rose amid heavy trading volume Friday. The brisk buying and selling came as stock options, index options and futures simultaneously expired - an event known as "triple witching." Declining issues on the New York Stock Exchange topped advancing ones 1,746 to 1,090, on volume of 1.2 billion shares. Nasdaq losers beat winners 2,501 to 1,445, as more than 1.7 billion shares changed hands.
In other markets, Treasury securities slipped. The dollar edged lower against the yen but rose versus the euro, which fell to a fresh record low.
Techs slump
Of Nasdaq's biggest movers, none was hit harder than Oracle (ORCL: Research, Estimates). The shares fell $6.63 to $78.31, despite posting fiscal first-quarter income of 17 cents per share, topping analysts' expectations. Revenue nearly doubled from the year-earlier figures. And the maker of database software also announced a 2-for-1 stock split.
 But Oracle, which surged ahead of its results announced late Thursday, faced concern about weakness in its applications software business, an area expected to see robust growth.
Analyst Gretchen Teagarden of Salomon Smith Barney told CNNfn's Market Call that the 42 percent growth in Oracle's application business was lower than the 47 percent her firm was looking for. Other analysts agreed.
For a market used to punishing stocks for the slightest financial imperfections, the battering is nothing new. Oracle, up more than 350 percent in a year, trades at more than 88 times next year's earnings, making it particularly vulnerable to any sell-offs. Other expensive stocks also fell.
Intel (INTC: Research, Estimates), a Dow component and one of Nasdaq's biggest movers, lost $2.13 to $57.50, its lowest level since late May. And Sun Microsystems (SUNW: Research, Estimates) slipped $2.88 to $114.58.
 Red Hat (RHAT: Research, Estimates), the distributor of the Linux operating system, fell $4.06 to $21.19 after reporting a fiscal second-quarter operating loss that was a penny narrower than expected.
The Dow's biggest loser, Hewlett-Packard (HWP: Research, Estimates), slid for the fourth time in five sessions, tumbling $5.25 to $103. Friday's losses come after BusinessWeek said HP may be interested in buying Xerox (XRX: Research, Estimates). Shares of the photocopier, which have lost more than half their value this year, gained $1.81 to $17.81.
Annette Geddes, portfolio manager at M.D. Sass, linked some of the market losses to the big gains made during August, when stocks may have gotten ahead of themselves. (268K WAV) (268K AIFF).
More news from CNNfn.com for investors:
· Net fund goes overseas
· Seibert likes Siebel
· Savings tips to retire rich
Still, investors found places to hide in "old economy" stocks Friday, keeping the Dow from slipping further. Procter & Gamble (PG: Research, Estimates) rose 66 cents to $61.94. And Exxon Mobil (XOM: Research, Estimates) gained $3.75 to $89, advancing with the price of oil.
U.S. light crude surged over $36 Friday. While good for oil producers, crude prices near their highest levels in ten years mean steeper fuel and transportation costs for businesses and consumers. The surge in oil gives investors one more reason to fret about an earnings slowdown when companies next month report results for the June-September period.
CPI weakens
In economic data, the Consumer Price Index, the government's best-known inflation gauge, fell 0.1 percent in August, countering expectations for a gain.
 While news of tumbling prices, the first decline in 14 years, might typically lift a market with the suggestion that interest rates won't go higher, the data had no market effect. Prior to this week, many economists already concluded that the Fed, confronted with evidence the economy is slowing, would not tighten credit anytime soon. 
|
