Wall St slips after tech sector results disappoint

By Leah Schnurr

NEW YORK (Reuters) - U.S. stocks fell on Friday, pulling back from the previous session's record highs as investors locked in gains following disappointing results from tech giants Microsoft and Google.

The Nasdaq fared worse than the other two major indexes, falling nearly 1 percent after Microsoft and Google both reported results that fell short of expectations.

Microsoft slumped 8.6 percent to $32.40, while Google tumbled 3.4 percent to $879.750. The S&P tech sector <.SPLRCT> led declines, falling 1.6 percent.

"It's the first time in this cycle that we've had some household names that have missed and I think that's important, especially on a day where we're starting to transition our entire focus over to earnings," said Art Hogan, managing director at Lazard Capital Markets in New York.

Also in the tech sector, Advanced Micro Devices dropped 14 percent to $3.99 after the company said gross margins would fall, even as the chip maker forecast stronger-than-expected revenue growth in the third quarter.

Still, encouraging earnings reports from other companies helped keep a floor under the market.

General Electric and Schlumberger both reported better-than-expected results, sending their shares higher. Dow component GE jumped 5 percent to $24.80, while Schlumberger was up 4.5 percent to $82.00.

The Dow Jones industrial average slipped 26.69 points, or 0.17 percent, to 15,521.85. The Standard & Poor's 500 Index fell 2.99 points, or 0.18 percent, to 1,686.38. The Nasdaq Composite Index dropped 27.82 points, or 0.77 percent, to 3,583.46.

In the absence of fresh economic data, the high-profile earnings disappointments in the tech sector prompted investors to lock in profits after some rosy results and reassuring comments from Federal Reserve Chairman Ben Bernanke on Thursday sent the Dow and S&P to record closing levels. The benchmark S&P is up more than 18 percent for the year.

Analysts expect S&P 500 companies' second-quarter earnings to have grown 3.5 percent from a year earlier, with revenue up 1.1 percent, according to Thomson Reuters data.

Among other companies to report, Whirlpool climbed 5.7 percent to $126.12 after raising its full-year outlook.

Intuitive Surgical slid 13 percent to $366.49 after the company cut its 2013 sales forecast and said U.S. regulators had issued a warning after an inspection of its facilities.

Meanwhile, investors digested news that China's central bank had announced long-awaited interest rate reforms, removing controls on the rates banks may charge clients for loans.

"This follows a series of announcements suggesting the (Chinese) leadership wants to - at least in terms of the announcements -reform the markets," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

"Obviously the implementation from headlines to actual operations is going to be more difficult, but that said, you have to start somewhere."

(Editing by Bernadette Baum)