NEW YORK -- A spike in unemployment to the highest level in nearly eight years gave investors Friday yet another reason to doubt the strength of the economy and sell stocks sharply lower. Tech issues fell for the third straight session, while blue chips pulled back following a three-session advance.
Aside from this week's rally in the Dow industrials, investors have been selling stocks for weeks because companies, while releasing first-quarter earnings results, haven't been able to tell them what they want to hear - that stronger profits lie ahead.
In late afternoon trading, the Dow was down 88.50, or 0.9 percent, to 10,003.37. The Dow rallied 272 points Tuesday through Thursday, claiming its first three-day winning streak since the period that ended March 12.
The broader market also fell. The Nasdaq dropped 25.90, or 1.6 percent, to 1,618.92, having fallen 10 of the previous 12 sessions. The Standard & Poor's 500 index declined 10.06, or 0.9 percent, to 1,074.50.
The tech sector has suffered the brunt of the selling, because it's expected to be the last to recover. Another factor in the tech stock selloff has been the fact that investors ran those stocks up the most in the lates bull market when companies including Cisco Systems were trading at 100 times their earnings.
"We are in a bear market, particularly in the Nasdaq area of the market. The excesses we built up over many years is being taken out of the market. Just like it went to extreme levels on the upside, it is going to extreme levels on the downside," said Mark Minervini, portfolio manager of First Mark Fund and president of Quantech Research Group.
Through Thursday's session, the Nasdaq composite index had slid 20 percent from its high close for the year - 2,059.38 back on Jan. 4. The Dow had declined 5.1 percent from its yearly high close of 10,635.25 on March 19.
That kind of fervent selling makes analysts hopeful that the market has found a bottom. Meanwhile, skittish investors worry that the market can always find another low.
"I think we are in the capitulation stage now," said Peter Cardillo, president and chief strategist of Global Partner Securities Inc.
Cardillo said he expects selling to slow next week as the market settles in at a lower trading range.
On Friday, Wall Street was disappointed by a weaker-than-expected unemployment report for April. The nation's jobless rate jumped to 6 percent in April from 5.7 percent in March. It is the highest level since August 1994 when unemployment was also at 6 percent.
Oracle slipped 18 cents to $8.37 after Goldman Sachs and SG Cowen reduced their earnings outlooks on the software maker.
Other tech losers included Texas Instruments, down $1.42 at $28.37, and Dell Computer, which declined $1.01 at $24.41.
Networker Cisco, slated to release its earnings next week, stumbled 46 cents to $13.18.
Blue chips were also lower as investors cashed in profits after the three-session rally. Wal-Mart fell $1.37 to $55.28, General Motors stumbled 79 cents to $65.45, and Coca-Cola declined 66 cents to $56.98.
Declining issues were even with advancers on the New York Stock Exchange. Volume came to 1.02 billion shares, compared with 1.05 billion at the same point Thursday.
The Russell 2000 index, the barometer of smaller company stocks, fell 3.28, or 0.6 percent, to 510.09.
In Europe, Britain's FT-SE 100 closed up 0.6 percent, while France's CAC-40 lost 1.5 percent and Germany's DAX index fell 1.7 percent.
Japan's financial markets were closed Friday for a national holiday. The markets will also close Monday for another national holiday and reopen Tuesday.
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