Chip shares decline in US

US stocks fell, finishing their fourth losing week in five, after Goldman, Sachs & Co said demand for semiconductor equipment may weaken and the government reported first-quarter growth was slower than previous estimates.

Microsoft Corp and Intel Corp led the declines. Trading on the New York Stock Exchange ahead of a three-day holiday weekend was the slowest since Dec. 27. Government warnings of possible terrorist attacks deterred investors already concerned over an anemic rebound in corporate profits.

"People are looking for confirmation in earnings of an economic improvement and still not seeing it," said John Carey, manager of the US$7 billion Pioneer Fund in Boston.

The Standard & Poor's 500 Index fell 13.26, or 1.2 percent, to 1,083.82. Technology stocks accounted for one-third of the loss.

The Dow Jones Industrial Average slipped 111.82, or 1.1 percent, to 10,104.26. The NASDAQ Composite Index dropped 36.14, or 2.1 percent, to 1,661.49.

For the week, the Dow lost 2.4 percent, erasing more than half of last week's advance. The S&P 500 fell 2.1 percent and the NASDAQ shed 4.6 percent.

Trading of 881 million shares on the Big Board was one-third below the six-month daily average. About three stocks fell for every two that gained.

The Friday before Memorial Day "is usually a light trading day," said Ken Schapiro, who oversees US$440 million at Condor Capital Management in Martinsville, New Jersey.

Semiconductor shares had the biggest losses after Goldman analyst James Covello said growth at chip-equipment companies may stall. He reduced his rating on the industry to "market weight" from "overweight."

Applied Materials Inc, the biggest semiconductor-equipment maker, fell US$1.77 to US$23.80.

KLA-Tencor Corp dropped US$2.66 to US$54.43, Novellus Systems Inc lost US$1.66 to US$46.18, and Lam Research Corp fell US$1.41 to US$24.01.

Among chipmakers, Intel lost US$0.73 to US$28.66 and Micron Technology Inc fell US$0.94 to US$23.36. The Philadelphia Semiconductor Index dropped 3.3 percent, its sixth straight loss.

The index surged 80 percent from September to early March and has declined 22 percent since that peak.

"It would not surprise me if the semiconductor stocks could still be driven lower, because people are scared," said Ray Rund, technology analyst at Shaker Investments in Cleveland, which oversees more than US$2 billion. New threats of terrorist attacks may have a greater effect on investor sentiment than the latest data on chip manufacturing, he said.

Other computer-related stocks also slid. Microsoft, the biggest maker of personal computer software, fell US$1.56 to US$53.26.

International Business Machines Corp dropped US$1.23 to US$83.12, and Oracle Corp slid US$0.52 to US$8.85.

Sun Microsystems Inc fell US$0.55 to US$6.86 and had the biggest percentage decline in the S&P 500. The maker of server computers that run corporate networks and Web sites will have to sell more machines in the final five weeks of this quarter than usual to meet its forecast that revenue in this quarter will be higher than in the previous three months.

Industrial companies including Boeing Co and Honeywell International Inc slid as the Commerce Department said the economy expanded during the first quarter at a 5.6 percent annual pace. That's less than the 5.8 percent rate the department previously reported and below the 6 percent rate economists had expected.