If weak financial results from big tech companies are sign of what's to come, stock indexes are in for a tough summer.
Stocks fell Friday, giving the market another losing week, after poor earnings reports from two major technology companies suggested that companies invested less in new technology as the economic recovery slowed.
Fears of a spreading European debt crisis also weighed on markets. Italian bank stocks plunged and trading in some of them was halted after Moody's warned that it might downgrade their credit ratings.
"I think it spooked a lot of people," said Frederick Rizzo, who analyzes European banks for T. Rowe Price. "The markets are really emotional right now."
The Dow Jones industrial average fell 115.42 points, or 1 percent, to 11,934.58. The Standard & Poor's 500 index fell 15.05, or 1.2 percent, to 1,268.45. The Nasdaq composite fell 33.86, or 1.3 percent, to 2,652.89.
The decline erased all of this week's gains for the Dow Jones industrial average and S&P index. The broad stock market has now fallen for seven of the eight last weeks, largely because of concerns that the U.S. economy is slowing and that Europe's debt problems may lead to another financial crisis. The S&P 500 is down 7 percent since it hit a high for the year April 29.
Technology stocks were broadly lower. Micron Technology Inc. fell 14.5 percent after the company said lower sales of computer chips hurt its earnings, which were far less than analysts had expected. Oracle Corp. fell 4 percent after its sales of computer hardware fell sharply. Cisco Systems Inc. fell 3.5 percent, and Microsoft Corp. lost 1.3 percent.
Government bond prices rose to their highest level of the year as investors favored lower-risk assets. The yield on the 10-year Treasury dipped to 2.86 percent.
The U.S. economy has cooled since late April. Recent reports on housing, employment, manufacturing and retail sales all have been weak. The debt crisis in Greece and fears that China's growth is slowing have also pushed markets lower.
"No one is expecting good news, but if it's worse than expectations, this is really a very shaky market," said Uri Landesman, president of Platinum Partners, a hedge fund.
Landesman expects that the Standard & Poor's 500 index will fall to 1,200 this summer as more companies report second-quarter earnings next month. The last time the S&P 500 crossed that threshold was in December 2010.
Stocks fell despite the fact that the government said the economy grew at a 1.9 percent annual rate in the first quarter, slightly higher than an earlier estimate of 1.8 percent. The figure still indicated very slow growth for a post-recession recovery. Economists expect little improvement in the second quarter, which ends next week.
Still, another government report showed that businesses ordered more machinery, equipment and airplanes in May than in April. Orders of such durable goods increased by 1.9 percent in May after a sharp decline in April.
Two stocks fell for every one that rose on the New York Stock Exchange. Volume was slightly above average at 4.4 billion shares.