The Dow and S&P 500 sank to session lows on Friday, erasing an early attempt at a rally as investors dumped financial shares amid another bout of worry about a possible fire sale of risky credit derivatives. The Dow Jones industrial average was down 82.42 points, or 0.67 percent, at 12,164.58.
The Standard & Poor's 500 Index was down 8.03 points, or 0.60 percent, at 1,328.88. The Nasdaq Composite Index was up 2.51 points, or 0.11 percent, at 2,295.54. In midmorning trade, technology shares advanced as optimism about valuations fuelled buying in the downtrodden sector.
Shares of Apple Inc, maker of the iPod and iPhone, led the Nasdaq's advancers, with a gain of 3 percent to $124.83. Microsoft Corp, a Dow component, climbed more than 2 percent. Earlier this week technology stocks took a heavy blow as data pointing to contraction in the vast US services sector and comments about slowing orders from network equipment maker Cisco Systems Inc unnerved investors.
"Tech was very oversold and at its lowest extreme, so we expected it to bounce," said Cleveland Rueckert, market analyst at Birinyi Associates Inc in Stamford, Connecticut.