U.S. & World

NEW YORK (AP) ― Investors dumped stocks and locked in profits Friday after the glow of a week full of strong earnings reports faded.

The retreat came as cautious forecasts from railroads caused unease about the economy and a rising dollar pushed prices of commodities lower, which hurt materials and energy stocks. The Dow Jones industrial average fell 109 points to end the week with a modest loss.

Traders appeared eager to collect gains after earnings reports for the July-September quarter came in far stronger than forecast, pushing major stock indexes up more than 6 percent in three weeks.

"We've had such a great run that you're going to get people taking money off the table, especially at the end of the week," said Dr. Bob Froehlich, senior managing director, at Hartford Financial Services.

Analysts have been calling for stocks to take more breaks after a seven-month rally that raised questions about whether the market was getting ahead of itself. The Standard & Poor's 500 index is up 59.6 percent since March, though it's still down 31 percent from its peak two years ago.

The day's drop came despite some pieces of good news. The National Association of Realtors reported that existing home sales posted their biggest increase in 26 years in September, while shares of Amazon.com rode to a new high after the Internet retailer's earnings and forecasts came in much stronger than expected. Amazon's gains as well as a jump in Microsoft Corp. after its own strong earnings helped limit the losses of the technology-heavy Nasdaq composite index.

However, the strong results from Amazon and Microsoft couldn't erases concerns over a poor outlook and sharp profit drop from chipmaker Broadcom Corp. or the pessimistic forecasts from railroad CEOs.

Union Pacific's CEO Jim Young said he expects the economy to "limp along" until unemployment starts to fall, while Burlington Northern also issued a tepid forecast. Railroads are seen as an early indicator of economic activity because of the key role they play in shipping goods to manufacturers and markets.

Linda Duessel, equity market strategist at Federated Investors, didn't see a cause for worry in the downturn, saying the market needed to pause after the massive surge it has made over the past seven months.

"The run-up has been too fast," she said. "You need to consolidate."

According to preliminary calculations, the Dow fell 109.13, or 1.1 percent, to 9,972.18. The S&P 500 index fell 13.31, or 1.2 percent, to 1,079.60. The Nasdaq composite index fell 10.82, or 0.5 percent, to 2,154.47.

For the week, the Dow lost 24 points, or 0.2 percent. The S&P 500 index fell 0.7 percent and the Nasdaq lost 0.1 percent.

The major indexes closed at their highest levels in a year on Monday but zigzagged the rest of the week as investors digested a rush of earnings reports and grappled with worries that stocks are overheated.

Frederic H. Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Ore., said some investors held off selling because the profit numbers were so strong.

"I think what we have seen is maybe the temptation to take profits postponed a bit because of the exceptional earnings numbers," he said.

Bond prices fell, sending their yields higher. The yield on the benchmark 10-year Treasury note rose to 3.50 percent from 3.42 percent late Thursday.

Crude oil fell 69 cents to settle at $80.50 per barrel on the New York Mercantile Exchange. Oil was below $70 when October began.

The big jump in sales of existing homes last month was seen as an aberration. Existing home sales rose 9.4 percent as buyers raced to complete purchases before a tax credit expires at the end of November. The pace of the gain was the strongest in two years and nearly double what analysts had expected.

Among companies posting earnings, Union Pacific said its profit was off 26 percent. The stock fell $3.39, or 5.6 percent, to $57.73.

Burlington reported a 30 percent drop in third-quarter earnings. Its shares fell $5.50, or 6.5 percent, to $79.12.

Amazon jumped $25.04, or 26.8 percent, to $118.49 after its third-quarter earnings jumped 68 percent. The stock logged a high of $119.65. The online retailer forecast more than 20 percent growth for the current quarter.

Microsoft's earnings fell 18 percent largely because it deferred revenue when it let buyers of PC's over the summer get free upgrades to Windows 7, which the company released this week. The stock rose $1.43, 5.4 percent, to $28.02.

Broadcom fell $2.23, or 7.3 percent, to $28.50 after the company said after the end of trading Thursday that its third-quarter earnings fell by half from a year ago. President and CEO Scott A. McGregor disappointed investors with a murky forecast on a conference call. "There's a little concern about whether Santa's coming this year or not," he said.

Three stocks fell for every one that rose on the New York Stock Exchange, where volume came to 1.3 billion shares, in line with Thursday.

Overseas, Britain's FTSE 100 climbed 0.7 percent, Germany's DAX index fell 0.4 percent and France's CAC-40 lost 0.3 percent. Japan's Nikkei stock average rose 0.2 percent.

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