Dow Posts Lowest Close of ’04

Surging oil prices and a disappointing sales forecast from Microsoft knocked the Dow index below 9,800 Friday to its lowest close of the year and spurred heavy losses in the technology sector.

Better-than-expected earnings from search engine Google failed to reassure investors that corporate profit growth is picking up. Oil topping $55 a barrel and a neck-and-neck campaign between President Bush and challenger John F. Kerry added to the angst, analysts said.

“What people want to know is what the price of oil is going to be and who’s going to be president,” Douglas Ober, who manages the Adams Express Co. fund in Baltimore, told Bloomberg News. “Until we get those things resolved, we’re sort of in limbo.”

The Dow Jones industrial average lost 107.95 points, or 1.1%, to 9,757.81, an 11-month low, as 28 of the 30 component stocks fell.

The broader Standard & Poor’s 500 index shed 10.75 points, or 1%, to 1,095.74, and the tech-heavy Nasdaq composite slid 38.48 points, or 2%, to 1,915.14. Those indexes ended at levels not seen since August.

In active trading, losers outnumbered winners by more than 3 to 2 on the New York Stock Exchange and by 2 to 1 on Nasdaq.

The Dow and the S&P; 500 lost ground for the third straight week, sliding 1.8% and 1.1%, respectively. The Nasdaq eked out a 0.2% gain, however, after two weeks of declines.

In the commodity market, crude oil climbed anew as worries about tight supplies of heating oil for this winter spurred buying. At the New York Mercantile Exchange, crude oil for December delivery closed 70 cents higher at $55.17 a barrel.

“It’s hard for people to get excited [about stocks] when oil has the potential to slow the economy down dramatically next year,” Jason Trennert, strategist at New York research firm ISI Group, told Reuters.

Earnings growth at S&P; 500 companies averaged 15.2% in the third quarter and is expected to be 15.4% in the fourth before slowing to 10.7% next year, according to analysts surveyed by Thomson Financial. But the fear on Wall Street is that oil prices could further crimp earnings.

Google, which surged $23.05 to $172.43 after reporting that third-quarter profit and sales more than doubled, was an exception in Friday’s trading.

Microsoft lost 82 cents to $27.74 a day after saying customers have been delaying purchases this quarter, dragging down revenue.

Broadcom tumbled $4.06 to $26.41 after the chip maker also guided down sales forecasts. Elsewhere in the chip sector, Xilinx fell $1.61 to $28.76 after forecasting a revenue decline.

Rambus slid $1.31 to $16.54 after an appeals court refused to dismiss Infineon Technologies’ claims that Rambus sought to monopolize the market for high-speed memory chips through unfair practices. Infineon’s U.S.-traded shares lost 30 cents to $10.43.

The U.S. dollar continued its slide against the euro, the yen and other major currencies.

In other equity highlights:

* Amazon.com dropped $4.87 to $34.60 after saying 2005 sales would be less than expected.

* Schlumberger shed $1.90 to $65.79 after the oil services giant reported a third-quarter operating profit slightly below analysts’ expectations.

* Gilead Sciences slumped $3.43 to $33.25 after an SG Cowen analyst said sales of Gilead’s HIV drugs were disappointing.

* Dow Chemical bucked the down trend, gaining $1.03 to $43.60 after a Texas jury found that Dow’s Union Carbide unit didn’t mislead a customer about the risks of an asbestos product.

* McKesson advanced $2 to $24.98 after the drug wholesaler reported quarterly profit that fell less than expected.