Weak Google results hit tech stocks, drag Wall St down

Shares of Google lost 8 percent - the stock's worst day since January 20 - to close at USD 695 after the Internet giant's third-quarter results showed earnings and revenue fell short of forecasts. The earnings report had not been expected until after the market's close. Trading of the stock was halted at 12:50 p.m. after Google had fallen as much as 10.5 percent to a session low of USD 676. Trading resumed at 3:20 p.m.

After the midday snafu and the stock's slide, Google was the biggest drag on the S&P 500. Tech stocks suffered, with the S&P 500 information technology index losing 1.53 percent. Shares of IBM, which disappointed investors a day earlier, lost 2.8 percent to close at USD 194.96 and pull the Dow lower.

"It's a huge impact on the market, and especially the tech stocks," said Paul Nolte, managing director at Dearborn Partners in Chicago. "What happened to Google is a continuation in the tech sector of some very poor earnings numbers. But we're not seeing the same lack of performance across the board from other sectors."

The Dow Jones industrial average dipped 8.06 points, or 0.06 percent, to close at 13,548.94. The Standard & Poor's 500 Index shed 3.57 points, or 0.24 percent, to 1,457.34. The Nasdaq Composite Index fell 31.26 points, or 1.01 percent, to end at 3,072.87.

The day's declines snapped the S&P 500's three-day string of gains, which had pushed the benchmark index up 2.3 percent through Wednesday's close.

The Dow's loss was limited by Travelers and Verizon.

Travelers gained 3.6 percent to USD 73.94 and gave the biggest boost to the Dow after the US property and casualty insurance company posted record operating earnings.

Verizon Communications Inc rose 2.4 percent to USD 45.78 after the company reported a record quarterly profit. Verizon attributed these gains to its wireless business. It also posted revenue that slightly exceeded expectations.

Morgan Stanley reported better-than-expected adjusted quarterly earnings on Thursday as big gains in its bond trading business increased its revenue. The stock fell, however, losing 3.8 percent to USD 17.79.

Technology was by far the day's weakest sector, but seven of the S&P 500's 10 sectors ended the session higher.

Weak jobs data released on Thursday also weighed on the market. Weekly jobless claims rose to 388,000 - or 32,000 more than analysts expected. A Labor Department official said it appeared that state-level administrative issues were distorting the data.

"On a longer-term basis and non-seasonally adjusted basis, the jobs numbers are in line with where they're been all year. And that's still indicative of very slowly improving employment," Nolte said.

Shares of eBay gained 5.5 percent to USD 50.83 after S&P Capital IQ raised its target price on the stock by USD 5 to USD 53.

After the close, Microsoft reported that its fiscal first-quarter profit fell, hurt by a dip in sales of personal computers running its Windows operating system. Microsoft's stock extended its decline in after-hours trading, falling 3.2 percent. The stock had closed the regular session at USD 29.50, down 0.3 percent.

In other earnings news after the bell, PC chipmaker Advanced Micro Devices Inc