NEW YORK - US shares tumbled Friday after a disappointing report on the US trade balance and a fresh rise in crude oil prices offset an upbeat outlook from tech bellwether Intel Corp.
The Dow Jones Industrial Average sank 77.15 points (0.71 percent) to close at 10,774.36.
The tech-heavy Nasdaq composite shed 18.12 points (0.88 percent) to 2,041.60 while the broad-market Standard and Poor's 500 index retreated 9.17 points (0.76 percent) to 1,200.08.
Weighing on the market, the Commerce Department reported that the US trade deficit with the world widened to a seasonally adjusted 58.3 billion dollars, the second highest on record.
The dollar lost strength against both the euro and the yen immediately after the trade news. Oil prices meanwhile pushed higher, reversing Thursday's decline.
"The trade deficit will get worse before it gets better, which would weigh on first-quarter growth estimates and potentially offset the upside surprises we have seen in manufactured goods shipments," said Drew Matus, an economist for Lehman Brothers.
Analysts said the market is pressured by the combination of higher oil prices, slipping bonds and growing fears of inflation.
"I think the fact that bonds are weakening is hurting the market," said Stephen Massocca, president and head of trading at Pacific Growth Equities.
"If it weren't for that, I think the market is a little oversold right now and would probably technically bounce, but there's enough pressure from what's going on in the bond market to keep it down slightly."
European shares gained ground, but moved off highs seen earlier in the day following news of the wider-than-expected US trade deficit.
The London FTSE 100 index gained 0.40 percent to 4,982.0 and the Frankfurt DAX 30 added 0.53 percent to 4,360.49, while in Paris the CAC 40 rose 0.27 percent to 4,049.18.
The DJ Euro Stoxx 50 index of leading eurozone shares climbed 0.22 percent to 3,060.36.
Intel failed to sustain early gains and fell 65 cents to 24.20 even after raising its revenue forecasts.
Rival chipmaker Advanced Micro Devices dropped 66 cents to 16.36 and Texas Instruments, the world's third biggest chipmaker, fell 88 cents to 26.20.
In retail, Kmart Holding Corp. surged 14.89 or 13 percent to 127.00 after brokers at UBS lifted their rating on the shares, as well as those of merger partner Sears Roebuck and Co. to "buy."
The broker cited the merged company's ability "to generate significant cash flow through asset sales, cross-selling of proprietary brands and cost savings." Sears added 4.20 to 57.56.
Bonds were under renewed pressure after the deficit news. The yield on the 10-year Treasury bond climbed to 4.535 percent from 4.459 percent Thursday and that on the 30-year bond to 4.809 percent against 4.756 percent. Bond yields and prices move in opposite directions.
03/11/2005 22:36 GMT