By Sruthi Shankar
(Reuters) - U.S. stocks fell on Friday, as Apple led a decline in technology stocks on concerns about weak iPhone demand and investors worried about the impact of a rise in U.S. bond yields.
Apple (O:AAPL) fell 3.8 percent and was the biggest drag on the major indexes after Morgan Stanley (NYSE:MS) estimated weak demand for its latest iPhones, adding to fears raised by Taiwan Semiconductor (TW:2330) of softer smartphone sales.
Microsoft (O:MSFT), Intel (O:INTC) and Cisco (O:CSCO) were the other big decliners, leading to a 1.6 percent drop on the S&P technology index (SPLRCT), its third straight day of decline.
"There's the Apple news and there maybe some nervousness coming into the upcoming earnings reports," said Daniel Morgan, senior portfolio manager at Synovus Trust Co in Atlanta.
Alphabet (O:GOOGL), Facebook (O:FB), Intel (O:INTC) and Microsoft (O:MSFT) are among the major technology companies reporting next week.
First-quarter profit at S&P 500 companies are expected to have recorded their strongest gain in seven years. Of the 87 companies that have reported so far, 79.3 percent have topped profit expectations, according to Thomson Reuters I/B/E/S.
General Electric (N:GE) jumped 3.4 percent after it posted quarterly results that topped estimates and affirmed its 2018 forecasts.
Schlumberger (N:SLB) dropped 1.9 percent after the oilfield services provider's profit just scraped past estimates.
Oil prices were down after U.S. President Donald Trump criticized OPEC and said oil prices were artificially high. The S&P energy index (SPNY) fell 0.6 percent.
At 01:03 p.m. ET the Dow Jones Industrial Average (DJI) was down 213.67 points, or 0.87 percent, at 24,451.22, the S&P 500 (SPX) was down 23.97 points, or 0.89 percent, at 2,669.16 and the Nasdaq Composite (IXIC) was down 91.82 points, or 1.27 percent, at 7,146.23.
Investors were also jittery as the 10-year Treasury yield (US10YT=RR) reached its highest level since March 21 as a bond selloff continued for a second day, driving the yield curve steeper after two weeks of flattening.
"It's slowly creeping closer to 3 percent, so the 10-year from a technical standpoint will show up on people's radar," Ryan Larson, head of U.S. equity trading at RBC Global Asset Management in Chicago.
When yields are high, investors favor bonds over defensive sectors such as consumer staples and real estate, which promise high dividends and slow, predictable growth. But banks benefit because high interest rates can boost their profits.
The KBW banking index (BKX) was up 0.13 percent, among the few gainers.
Declining issues outnumbered advancers by a 2.40-to-1 ratio on the NYSE and by a 1.74-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and 20 new lows, while the Nasdaq recorded 44 new highs and 41 new lows.