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4:25 pm : Microsoft (MSFT 32.94, -0.31) gave the market everything it was looking for when it reported its fiscal second quarter results after Thursday's close. The software giant topped expectations and raised its revenue and earnings per share guidance for the fiscal year, which ends in June, noting broad-based strength in its business.

The market chewed up the report, liking the taste of it in early trading, and then promptly spit it back out, hitting both Microsoft and the broader averages with losses to close a remarkable week of trading.

The inability of Microsoft's stock to hold its opening gains, which were as much as 5.3%, spurred a disappointment trade that then took most stocks lower on the day. Dow components Caterpillar (CAT 65.93, +0.68) and Honeywell (HON 58.25, +2.05) managed to buck the trend after sharing reassuring earnings news.

Selling efforts were compounded by renewed concerns surrounding the likelihood of further credit losses for the financial sector, worries that a rescue plan of some sort for the bond insurers was no sure thing, and rumors that a hedge fund was in trouble.

On top of that, Merck (MRK 47.79, -1.77) and fellow drug company Schering-Plough (SGP 19.02, -1.15) got hit on a seemingly benign announcement from the FDA that it is still awaiting more results on the study of the efficacy of their joint cholesterol drug, Vytorin, and that an eventual review could take up to six months. Both stocks made up some lost ground, but still finished lower and acted as a weight on the market.

Strikingly, the financial (-2.5%) and consumer discretionary (-2.0%) sectors, which were the leaders in the rebound off Wednesday's low, were the hardest hit areas Friday. Although both areas were prime for some profit-taking, their weakness Friday is apt to stir concerns for some participants that the rally try this week will be short-lived.

A late-day report that New York officials sued Countrywide's (CFC 6.02, -0.09) underwriters for fraud triggered a final wave of selling interest that left the major indices near their lows of the session when the closing bell rang.

Every sector ended the day with a loss, although the materials sector (-0.2%) held up the best, aided in part by strength in certain gold stocks like Newmont Mining (NEM 53.26, +0.29) which followed reports of a shutdown of some South African mines due to a power shortage. Gold futures closed the week up 0.9% at a new high of $919.10 per troy ounce.

Weakness in the stock market once again benefited the Treasury market. The 10-year note jumped more than a point and its yield fell back to 3.56%.DJ30 -171.44 NASDAQ -34.72 NQ100 -2.1% R2K -0.6% SP400 -0.9% SP500 -21.46 NASDAQ Dec/Adv/Vol 1611/1394/2.64 bln NYSE Dec/Adv/Vol 1807/1365/1.88 bln

3:30 pm : The major indices pare a portion of their losses in a broad-based move. The stock market is now trading at its best level since 1:00 ET. It has been a volatile week of trading, although the S&P is set end the week near the unchanged mark.

The following is the best and worst performing industry groups of the week as we head into a final half hour of trading. Best: 1. Homebuilding (+30.9%) 2. Coal & Consumable Fuels (+17.1%) 3. Apparel & Accessories (+16.8%). Worst: 1. Wireless services (-14.3%) 2. Health Care Services (-9.7%) 3. Managed Healthcare (-8.6%)DJ30 -114.08 NASDAQ -21.79 SP500 -15.01 NASDAQ Dec/Adv/Vol 1716/1279/2.13 bln NYSE Dec/Adv/Vol 1870/1270/1.40 bln

3:00 pm : The major indices are trading near their session lows. Buyers remain on the sidelines after being disappointed that the stock market was unable to hold onto its opening gains. At current levels, the S&P and Nasdaq are set to end the week with a modest loss, while the Dow is set to end slightly higher.

There have been quite a few headlines crossing the wires regarding bond insurers. Standard & Poor's analysts said bond insurers must resolve business viability and other issues in order to retain their "AAA" ratings, according to Reuters. Reuters also reports that a bond insurers group said the industry is "financially strong" and is intent on defending its top credit ratings.DJ30 -159.16 NASDAQ -29.13 SP500 -20.01 NASDAQ Dec/Adv/Vol 1583/1388/1.99 bln NYSE Dec/Adv/Vol 1818/1318/1.27 bln

2:35 pm : The stock market is off its worst level, but continues to trade with a substantial loss.
Barclays Capital said banks may need to raise another $143 billion in capital if bond insurers get their credit ratings cut, according to Bloomberg.com. The article states banks have already raised $72 billion. If bond insurers get their ratings cut, it will lower the value of the $2.4 trillion in bonds they insure. Bond insurer Ambac (ABK 11.61, +0.28) is posting a slight gain on reports that it may be bought by vulture fund investor Wilbur Ross.

Merck (MRK 47.41, -2.15) and Schering-Plough (SGP 18.53, -1.64) just came under selling pressure after the FDA said the Vytorin study will take six months to review.DJ30 -133.80 NASDAQ -21.43 SP500 -17.56 NASDAQ Dec/Adv/Vol 1501/1426/1.85 bln NYSE Dec/Adv/Vol 1808/1328/1.18 bln

2:00 pm : The stock market comes under a fresh wave of selling pressure, sending it to new intraday lows. Meanwhile, Treasuries contine to rally as stocks weaken. The 10-year note is up 32 ticks, pushing its yield down to 3.58%.

All sectors are trading in the red. The financial sector (-2.7%) has extended its losses. Consumer discretionary (-1.9%) is the second worst perform sector.

Tech (-1.5%) is also posting a large loss as Apple (AAPL 131.40, -4.20) again comes under selling pressure. The stock is down 34% in 2008 compared to the tech sector's 14% decline.DJ30 -145.99 NASDAQ -26.67 SP500 -19.48 NASDAQ Dec/Adv/Vol 1509/1417/1.67 bln NYSE Dec/Adv/Vol 1619/1489/1.04 bln

1:30 pm : Stocks are trading near their recently reached session lows. The materials sector (+0.1%) has recovered into the green, although it remains well off its session high.

Financials have been hit the hardest, now down 1.9%. 18 of its 19 industry groups are lower. Thrifts & mortgages is the main laggard with a 4.2% loss. Investment banks & brokerages comes in as the second worst-performing group with a 3% loss. Residential REITs are managing to hold onto a 1.4% gain.DJ30 -107.11 NASDAQ -13.79 SP500 -13.70 NASDAQ Dec/Adv/Vol 1251/1648/1.53 bln NYSE Dec/Adv/Vol 1548/1532/951

1:00 pm : The major indices fall to fresh lows. All ten of the sectors are now in negative territory. In the past half-hour, Standard and Poor's lowered its ratings on 93 classes of mortgage pass-through certificates from 25 different U.S. subprime residential mortgage-backed securities transactions from nine issuers.

Meanwhile, disappointment that Microsoft (MSFT 33.21, -0.04) has slipped into negative territory is adding to the selling pressure.DJ30 -92.75 NASDAQ -9.98 SP500 -11.92 NASDAQ Dec/Adv/Vol 1094/1790/1.38 bln NYSE Dec/Adv/Vol 1143/1923/843 mln

12:35 pm : Stocks are fluctuating around the unchanged mark. The materials sector (+1.1%) continues to provide leadership.

Despite the market's decline, market breadth remains positive due to the outperformance of small-cap and mid-cap stocks. The Russell 2000 Index is up 1.1% and the S&P 400 Mid-Cap Index is up 0.5%. Advancers outpace decliners by 9-to-5 on the NYSE and by 8-to-5 on the Nasdaq.DJ30 -22.60 NASDAQ +6.05 SP500 -3.29 NASDAQ Dec/Adv/Vol 1053/1761/1.21 bln NYSE Dec/Adv/Vol 1174/1884/738 mln

12:00 pm : Stocks opened with significant gains, lifted by strong earnings and outlook from a tech giant and a report that a struggling bond insurer may be acquired. The stock market then drifted lower as investors remain uneasy and traders take some profits. At midday, stocks are off their lows as they trade at the unchanged mark.

Microsoft (MSFT +33.51, +0.26) fell off its highs and is now only posting a small gain despite the company's strong earnings report. Microsoft reported a second quarter net income of $0.50 per share, 92% higher than its $0.26 per share earnings in the year ago period. The company's results also topped the consensus estimate that called for a profit of $0.46 per share. Microsoft raised its outlook for the full year, estimating earnings of $1.85 to $1.88 per share, beating analysts' forecast of $1.81 per share.

There were a large number of companies that reported earnings, and most were better than expected. Dow components Honeywell (HON 59.55, +3.35) and Caterpillar (CAT 66.44, +1.20) are standouts after investors were pleased with their in-line earnings reports.

The Evening Standard reported that billionaire vulture fund investor Wilbur Ross is in talks to take over bond insurer Ambac (ABK 12.00, +0.67). Its stock is off its highs, but is managing to post a gain while other financials (-0.8%) struggle this session.

There was not a specific catalyst to account for the stock market's decline. Profit taking is certainly playing a role, as traders trim positions after the market's 7.8% surge from Wednesday's low to this session's high.

The market turned south as CNBC reported that Goldman Sachs (GS 196.47, -2.38) is cutting 5% of its workforce. Goldman Sachs quickly refuted the report, saying it is cutting the bottom 5% of performers, as it always does during its annual review. There are also rumors that European banks may be facing further write-downs and that a hedge fund is liquidating its assets.

Six of the ten sectors are higher, led by a 1.2% gain in materials. Financials are the main laggard with a 0.8% decline. DJ30 +6.10 NASDAQ +8.89 SP500 +0.19 NASDAQ Dec/Adv/Vol 1061/1736/1.14 bln NYSE Dec/Adv/Vol 1140/1892/693 mln

11:30 am : Stocks remain in negative territory. The Dow has dropped to fresh session lows. The market has had wild swings of late, as investors remain nervous. Treasury bonds have rallied as stocks decline in a flight-to-quality bid.

There does not appear to a specific catalyst for the stock market's recent downturn, but several factors may be contributing. 1) The reports of Goldman Sachs (GS 195.07, -3.78) job cuts may have unnerved the market even though the company said it was a "misrepresentation." 2) There is talk that another big European bank may face another write-down 3) There is talk that a hedge fund is liquating. 4) Traders are participating in some profit taking after the S&P's impressive 7.8% surge from Wednesday's low to this session's opening high.DJ30 -46.33 NASDAQ -1.64 SP500 -5.60 NASDAQ Dec/Adv/Vol 1096/1626/940 mln NYSE Dec/Adv/Vol 1205/1803/556 mln

11:00 am : Stocks fall into the red, led by financials, as CNBC reports that Goldman Sachs (GS 195.23, -3.62) is laying off 5% of its workforce. Stocks then recovery some after Goldman Sachs told CNBC the story is a "misrepresentation." They are laying off the bottom 5% of performers as part of their regular annual review process. Stocks have since crossed back into negative territory led by a 1.1% drop in financials.

Goldman Sachs has been able to navigate through the subprime turmoil relatively unscathed. The market's negative response showed investor fear that if Goldman needed to cut jobs much worse was to come from firms that have been hit hard such as Citigroup (C 29.96, -0.37) and Merrill Lynch (MER 56.66, -0.79).

Meanwhile, Fannie Mae (FNM 32.75, -1.44) and Freddie Mac (FRE 31.02, -0.98) fall to session lows as Reuters reports that Fannie's mortgage delinquencies rose to 0.90% in November from 0.83% in October.DJ30 -27.88 NASDAQ +2.16 SP500 -3.17 NASDAQ Dec/Adv/Vol 1056/1629/733 mln NYSE Dec/Adv/Vol 1029/1954/428 mln

10:30 am : The stock market drops to its lowest levels of the session, but continues to post a modest gain. There has been notable selling interest within the tech sector (+0.5%), which was up as high as 1.9%. There has been a drop in shares of Apple (AAPL 135.82) and Intel (INTC 20.67, -0.02) after providing leadership at the open.

Microsoft (MSFT 33.98, +0.73) is off its opening high, but continues to post a solid gain in the wake of its earnings report. Microsoft reported a second quarter net income of $0.50 per share, 92% higher than its $0.26 per share earnings in the year ago period. The company's results also topped the consensus estimate that called for a profit of $0.46 per share. Microsoft raised its outlook for the full year, estimating earnings of $1.85 to $1.88 per share, beating analysts' forecast of $1.81 per share.DJ30 +44.14 NASDAQ +20.04 SP500 +7.24 NASDAQ Dec/Adv/Vol 849/1731/480 mln NYSE Dec/Adv/Vol 668/2162/206 mln

10:00 am : Stocks give up a portion of their opening gains as the financial sector (+0.4%) slips off its highs. The sector managed to advance yesterday, but underperformed the stock market.
Nine sectors are trading higher, led by the materials (+2.1%) and energy (+1.4%) sectors. Consumer staples (-0.03%) is in the red, but is basically flat.DJ30 +63.57 NASDAQ +27.28 SP500 +9.84 NASDAQ Dec/Adv/Vol 488/1862/177 mln

09:40 am : Stocks start on a high note, with the Nasdaq set to outperform for the second straight day. The buying interest is being fueled by a strong earnings report and outlook from Microsoft (MSFT) and an Evening Standard report that billionaire vulture fund investor Wilbur Ross is in talks to take over bond insurer Ambac (ABK). Since yesterday's close the majority of earnings reports have been better than expected.

There are no economic reports or scheduled Fed speakers this session.

DJ30 +86.00 NASDAQ +40.56 SP500 +14.78

09:16 am : S&P futures vs fair value: +11.5. Nasdaq futures vs fair value: +33.5.

09:00 am : S&P futures vs fair value: +11.0. Nasdaq futures vs fair value: +34.0. Futures gain
some ground and point to a strong start. In commodity trading, gold hit an all-time high of $924.30 per ounce in overnight trade on news that companies stopped mining in South Africa due to power outage concerns. Crude oil is up 1.2% to $90.50 per barrel.

08:31 am : S&P futures vs fair value: +7.6. Nasdaq futures vs fair value: +26.8. Stock futures continue to point to a higher start. The majority of earnings reports from last night and this morning have been better than or inline with expectations. There are no economic releases or Federal Reserve speakers today.

08:00 am : S&P futures vs fair value: +8.1. Nasdaq futures vs fair value: +24.0. Futures point to a higher start, with the Nasdaq set to outperform. A strong earnings report and outlook from Microsoft (MSFT) is the main catalyst for the buying interest. Also lending support is a report that billionaire investor Wilbur Ross is in talks to take over struggling bond insurer Ambac (ABK). In overseas markets, Hong Kong’s Hang Seng closed up 6.7% and France’s CAC 40 and Germany’s DAX are currently up more than 1%.
06:23 am : S&P futures vs fair value: +6.0. Nasdaq futures vs fair value: +23.0.

06:23 am : FTSE...5927.00...+51.20...+0.9%. DAX...6915.09...+94.02...+1.4%.

06:23 am : Nikkei...13629.16...+536.38...+4.1%. Hang Seng...25122.37...+1583.10...+6.7%.