U.S. stocks fell on Friday as declines in industrials, energy shares and some tech companies overshadowed strong earnings from Microsoft Corp .

The technology gains from Microsoft were countered by weakness in semiconductors after disappointing results from Broadcom Corp and MEMC Electronic Materials Inc .

Energy shares stumbled as Schlumberger Ltd fell 2.8 percent to $66.65 after the oilfield services company warned natural gas activity would remain weak until late 2010.

The S&P Energy index <.GSPE> shed 1.2 percent.

Shares of Burlington Northern Santa Fe Corp , the second-biggest U.S. railroad, posted a 7.1 percent decline to $79.15, after reporting a 30 percent drop in quarterly profit. The stock helped drag industrials <.GSPI> 1.2 percent lower.

The reason we sold off is because we're still digesting all the earnings results we've had, said Thomas Nyheim, portfolio manager at Christiana Bank & Trust Co. in Greenville, Delaware.

The Dow Jones industrial average <.DJI> dropped 63.33 points, or 0.63 percent, to 10,017.98. The Standard & Poor's 500 Index <.SPX> fell 7.85 points, or 0.72 percent, to 1,085.06. The Nasdaq Composite Index <.IXIC> shed 1.20 points, or 0.06 percent, to 2,164.09.

Nyheim cited disappointing sales as a headwind working against the market's rally. There were some good results, but we're not seeing enough top-line growth. That creates the fear that we could see a jobless recovery.

In economic news, sales of previously owned U.S. homes surged to their highest level in over two years in September, a survey showed on Friday, providing further evidence the housing market was on the mend.

(Reporting by Chuck Mikolajczak; Additional reporting by Ryan Vlasetlica; Editing by Kenneth Barry)