U.S. Stocks Drop on Poor Consumer Confidence Report; Microsoft Slides

Microsoft pushed technology shares to its biggest decline in the Standard & Poor's 500 Index as its earnings report stirred doubts as to whether PC demand will grow as the economy continues to slow. Retailers dropped as crude prices surged on reports that a ship hired by the U.S. military forces fired shots at two Iranian vessels.

The S&P 500 slid 3.33 points, or 0.2 percent, to 1,385.49 at 1:18 p.m. in New York. The Dow Jones Industrial Average lost 66.68, or 0.5 percent, to 12,782.27. The Nasdaq Composite Index retreated 30.99, or 1.3 percent, to 2,397.93.

Stocks opened higher after credit card giant American Express Co. reported a less-than-forecast first-quarter profit drop on Thursday. The company's shares were.

Microsoft was down $2.04 or 6.4 percent during early afternoon trade, in the wake of its earnings report after the close on Thursday, which had the company reporting an 11 percent profit drop on virtually flat revenue. The world's largest software maker reported a 24 percent drop in sales of Windows last quarter and forecast earnings that may miss analysts' estimates.

Following news reports that a ship hired by the U.S. Navy fired shots at an Iranian boat in the Gulf, crude-oil futures gained $3.17 to $119.23 a barrel on the New York Mercantile Exchange, while gold gained $5.3 to $892.1 an ounce.

Bed Bath & Beyond Inc. and Starbucks Corp. declined after the jump in oil prices increased concern that higher fuel bills will cause consumers to spend less on goods.

Bed Bath & Beyond, the largest U.S. home-furnishings retailer, declined 38 cents to $32.61. Starbucks, which this week forecast its first annual profit decline in eight years, lost 37 cents to $15.62.