Stocks retreated Friday after cautious forecasts from railroads stirred unease about the economy and a slide in oil hit energy stocks.
The Dow Jones industrial average fell 125 points after the comments from railroad CEOs raised worries over how long it would take for a recovery to take hold. Union Pacific's CEO Jim Young said he expects the economy to "limp along" until unemployment starts to fall. 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.
A rising dollar also hit the market by pushing prices for commodities such as oil lower. That weighed on energy and materials stocks.
Investors looked past aand strong profits at key technology companies as traders found little reason to buy into the market after a strong rally on Thursday.
A big jump in sales of existing homes last month was seen as an aberration. The National Association of Realtors said 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.
Profits at Amazon.com and Microsoft sailed past expectations and helped lift the tech-heavy Nasdaq composite index. A poor outlook and sharp profit drop from chipmaker Broadcom Corp. late Thursday dented some of the enthusiasm over Amazon and Microsoft.
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 Standard & Poor's 500 index is up 61.6 percent from a 12-year low in March.
"The run-up has been too fast," she said. "You need to consolidate."
The Dow Jones industrial average is down 109 at 9,972. The Standard & Poor's 500 index is down 13 at 1,080. The Nasdaq composite index is down 11 at 2,155.
Stocks posted big gains Thursday, sending the Dow up 132 points. Investors snapped up financial shares after several banks said they weren't seeing as many loans go bad. The market also extended its gains after Wal-Mart Stores Inc. said it expects sales to grow this year and increase at a faster pace next year.
Bond prices fell, sending their yields higher. The yield on the benchmark 10-year Treasury note rose to 3.48 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.
Among companies posting earnings, Union Pacific said its profit was off 26 percent, while revenue fell 24 percent. The stock fell $3.81, or 6.2 percent, to $57.31.
Burlington reported a 30 percent drop in third-quarter earnings, while revenue fell 27 percent. That sent its shares down $5.70, or 6.7 percent, to $78.92.
Amazon jumped $24.92, or 26.7 percent, to $118.37 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. Earnings would have risen otherwise and the company continued to cut costs. The stock rose $1.48, 5.6 percent, to $28.07.
Broadcom fell $1.96, or 6.4 percent, to $28.77 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.
Energy stocks fell. Oilfield services company Schlumberger Ltd. fell $3.88, or 5.7 percent, to $64.72, while Devon Energy Corp. fell $2.22, or 3.2 percent, to $68.14.
Three stocks fell for every one that rose on the New York Stock Exchange, where volume came to 892.2 million shares compared with 943.2 million shares traded at the same point 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.