Proctor & Gamble's profit warning hammered blue-chip stocks Thursday as the Dow Jones industrial average fell 143 points to 10.670.11. Technology stocks were relatively unchanged as the Nasdaq composite fell 14 points to 3,825.61.
Wall Street's attention clearly was focused on Friday's Producer Price Index figures from May. Economists expect the overall PPI to rise 0.3 percent in May, according to a poll.
Earlier in the session, investors cheered U.S. jobless claims, which rose by a stronger-than-expected 309,000 in the week ended June 3, lifting optimism that the economy's blazing pace of growth may be cooling somewhat, limiting the need for tighter monetary policy.
"Anything that demonstrates that the Fed's tightenings of the past 11 months are taking hold ... is going to be bullish for stocks," said Paul Cherney, an analyst at S&P Marketscope. "It's just more evidence that the Fed is at or near the end of its tightening cycle."
Microsoft (Nasdaq: MSFT) fell 1 3/4 to 68 3/4 as CEO Steve Ballmer vowed to fight the proposed breakup of the company. Oracle (ORCL) closed up 2 3/8 to 82 3/8 and Sun Microsystems (SUNW) ended off 1 5/16 to 87.
EarthLink Inc. (Nasdaq: ELNK) closed off 3/8 to 17 9/16 after announcing it will snap up OneMain.com (Nasdaq: ONEM) for about $308 million, in a deal designed to strengthen its coverage of rural communities and smaller cities. OneMain.com shares shot up 3 5/16, or 41 percent, to 11 5/16.
Among widely held PC stocks, Dell Computer (DELL) closed unchanged at 45 1/4; Compaq (CPQ) shaved off 5/16 to 26 13/16; Gateway (GTW) added 1 1/2 to 56 and Apple (AAPL) lopped off 1 13/16 to end at 94 3/4.
Inktomi Corp. (Nasdaq: INKT) dropped 2 15/16 to 125 7/8 after it said it will buy Ultraseek Corp., a subsidiary of Walt Disney Co.'s GO.com Internet division (NYSE:GO), up 3/16 to 12 1/2, for about $344 million.
Yahoo! (YHOO) trimmed 1/2 to 144 while America Online (AOL) and eBay (EBAY) fell 2 1/8 and 3 15/16 a share, respectively. Amazon.com (AMZN) inched up 1/16 to 51 7/8 and Lycos (LCOS) closed off 1 7/8 to 64.
In pre-announcements, Great Plains Software, Inc. (Nasdaq: GPSI) plunged 18 3/4 to 21 5/8 after it warned earnings for the fourth quarter would be far below expectations due to lower-than-expected revenue.
Merix Corp.(Nasdaq:MERX) shot up 13 1/8 to 45 after it said earnings for its fourth quarter should be between 45 and 47 cents a share, well above First Call's expectation of 27 cents a share.
National Semiconductor (NSM) closed off 1 1/8 to 63 even though it topped analysts' estimates by 6 cents a share in its fourth quarter. Intel (INTC) lost 2 1/2 to 126 7/16 while Advanced Micro Devices (AMD) and IBM (IBM) ended off 1/8 and 1 1/4 a share, respectively.