MIDDAY MARKETS: Profit-taking halts rally

A mixed batch of earnings reports convinced investors to take some profits at midday, putting a damper on the week's rally.

The Nasdaq fell 35.92 points to 2,146.22, and the Dow Jones industrial average slipped 143.79 points to 10,549.92. The Inter@ctive Week @Net Index fell 2 points to 207.52.

Among the biggest movers after Thursday night's earnings reports were Ericsson (Nasdaq: ERICY), off $1.23, or 18 percent, to $5.85 and downgraded by Goldman Sachs on a disappointing first quarter, and competitor Nokia (NYSE: NOK), off 34 cents to $31.26 after beating its first-quarter targets but lowering numbers for future quarters.

"Nokia may be the cause of the turnaround, but more so I would say it's just a case of vertigo, a little fear of height at these levels in the major indices," Art Hogan, chief market analyst at Jefferies & Co. told Reuters. "We've had three very strong days in a row, so it's difficult to hold on to that kind of pace," he added.

Microsoft (Nasdaq: MSFT) was up just $1.94 to $69.98 following a stellar quarterly report Thursday, which was expected to help support the Nasdaq's recent rally.

Online auctioneer eBay (Nasdaq: EBAY), up $1.96 to $51.95, was making decent gains after it reported a strong first quarter Thursday along with a lot of other good news, but the company may have trouble keeping up with ever-increasing expectations.

Business-to-business software company Ariba (Nasdaq: ARBA), up 91 cents to $7.94, matched reduced earnings expectations for the second quarter, but saw revenue fall about $10 million short of analysts' expectations, the company said Friday.

Competitor Commerce One (Nasdaq: CMRC) on Thursday reported a loss of $25.5 million, or 11 cents per share, in the first quarter, matching the lowered expectations set by Wall Street analysts. Its shares were down $2.71 to $11.40.

Amazon (Nasdaq: AMZN) was off 31 cents to $15.68, AOL Time Warner (NYSE: AOL) fell $1.40 to $48.50 and Yahoo (Nasdaq: YHOO) was off 7 cents to $19.89.

Cisco Systems (Nasdaq: CSCO) fell 6 cents to $18.85, Intel (Nasdaq: INTC) lost 47 cents to $32.02 and Oracle (Nasdaq: ORCL) fell 20 cents to $20.12.

ZDII staff and Reuters contributed to this roundup.