Microsoft concerns drag down Nasdaq

NEW YORK » Wall Street fell modestly yesterday as investors collected profits amid nervousness about the government's second-quarter gross domestic product report. Concerns about another product delay at Microsoft Corp. weighed on the technology sector.

Robust earnings growth at major oil companies lifted stocks through most of the session, with Exxon Mobil Corp. posting the second-highest profit ever reported by a public U.S. company and Royal Dutch Shell PLC seeing a 40 percent jump in its income.

But the market resumed its recent erratic behavior as traders grew anxious about the Commerce Department's GDP reading today. Stronger-than-expected growth could bring more interest rate hikes, while a number below estimates might be a sign the economy is slowing quicker than expected; the uncertainty prompted investors to play it safe and take money off the table.

"To have leadership come from great earnings in the energy and automotive sectors is not sufficient enough to move the market materially higher," said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. "I think what has investors concerned is what's next for the economy and future rate hikes."

Mixed economic data created more confusion for Wall Street. A bigger-than-forecast drop in new home sales stirred fears of an economic collapse, but an upswing in durable goods orders signaled persistently strong demand for manufactured products.

The Dow Jones industrial average lost 2.08, or 0.02 percent, to 11,100.43, after rising as much as 85 points earlier. The Dow has barely budged since rising 230 points Monday and Tuesday.

Broader stock indicators also retreated. The Standard & Poor's 500 index dropped 5.20, or 0.41 percent, to 1,263.20, and the tech-heavy Nasdaq composite index fell 15.99, or 0.77 percent, to 2,054.47.

Oil futures posted more gains amid caution about the Middle East conflict and pipeline snags at Shell's Nigerian operations. A barrel of light crude gained 60 cents to settle at $74.54 on the New York Mercantile Exchange.

Investors' excitement over strong earnings dissipated as they awaited the advance GDP reading for hints about the economy's health. Economic growth is forecast to slow to an annual rate of 3 percent from 5.6 percent in the first quarter.

"We just don't have anything to focus on right now," said Ryan Larson, senior equity trader at Voyageur Asset Management. "It's a real slow afternoon in the summer. Unfortunately, there's no one there to put money to work, and we trade lower on that."