* Tech stocks were clobbered Friday by the shocking loss at Apple Computer, which drove its shares down 8 1/4 or 23%.
* The long-term bond rally kept rolling, dropping the 30-year Treasury bond yield to another historic low. Oil plunged nearly 50 cents to a three-year low.
Technology stocks suffered one of their worst selloffs yet this year as investors feared that slowing computer sales and cutthroat competition will lead to another major shakeout in the business.
The selling drove the NASDAQ composite index--home of many smaller tech companies--down 8.96 points, or 1.3%, to 699.73.
Meanwhile, blue-chip stocks gave only minor ground. The Dow industrials lost 22.64 points to 3,528.29. For the week, the Dow was up 7.23 points.
Surprisingly, the broad market was not alarmingly negative, despite the tech-stock decline. On NASDAQ, losers topped winners 12 to 9. On the New York Stock Exchange, trading volume was active at 263 million shares, but there was no panic.
Still, some analysts worried that the disappointing earnings reports hammering tech issues could presage bigger problems for stocks.
"What we're seeing is the earnings problem overcoming psychological positives from (low) inflation and interest rates," said Robert Caputo, analyst at Swiss Bank Corp.
Among Friday's highlights:
* Apple collapsed 8 1/4 to 27 1/2 in extraordinary trading of 19 million shares, one day after reporting its worst quarterly loss ever.
Brokerage Oppenheimer & Co. said Apple has a "gigantic" personal-computer inventory problem that only deep price-cutting and cost-cutting will solve.
Other PC stocks also plunged on fears that Apple's sales problems are spreading. Compaq sank 2 1/2 to 43 3/4, AST Research fell 1 to 14 and IBM dropped 1 7/8 to 45 5/8--its lowest price since the 1970s.
* Elsewhere in tech, Intel slid 2 1/4 to 50 1/2, Sun Microsystems fell 2 1/8 to 28 3/4, Microsoft lost 2 3/8 to 81 1/8, Oracle dropped 3 1/8 to 46 1/4 and Cisco Systems sank 2 1/4 to 50. Even Texas Instruments, which reported a 62% rise in quarterly earnings, dove 4 to 71 7/8.
* Another tech firm, video conferencing-systems maker PictureTel, plunged 6 1/8 to 19 1/2 after a disappointing earnings report.
* Drug stocks, the market's perennial losers for the past 18 months, plunged again. Warner-Lambert fell 3 3/4 to 63 3/4 after it said second-quarter earnings will be up just 6%. Other losers included Schering-Plough, down 1 3/4 to 64 3/8; Pfizer, off 1 1/8 to 62 1/8, and Eli Lilly, off 3/4 to 45 7/8.
* Apparel maker Liz Claiborne plummeted 6 7/8 to 22 3/4 after posting a 19% drop in quarterly earnings. It blamed weak consumer spending.
* On the plus side, some investors sought refuge in defense stocks. Logicon rose 3/4 to 28, Lockheed gained 7/8 to 66 7/8, Raytheon added 7/8 to 61 and Teledyne rose 5/8 to 24 1/8.
* Some industrial issues also advanced. They have been gaining all year, as many consumer issues have retreated. Caterpillar rose 7/8 to 78, Nucor gained 1 3/8 to 85 7/8, Cummins Engine was up 1 1/2 to 88 7/8 and USX-U.S. Steel rose 3/4 to 39 5/8.
Overseas, the news was better: Tokyo's Nikkei index jumped 173.51 points to 20,331.53 ahead of Sunday's parliamentary elections.
In Frankfurt, the DAX index added 5.80 points to 1,813.46. In London, the FTSE-100 index was up 1.3 points to 2,833.00.
The yield on the 30-year Treasury bond closed at 6.54%, yet another historic low, as dissipating inflation worries gave buyers more impetus to buy long-term bonds.
The T-bond yield was 6.55% on Thursday and 6.64% a week ago. It started the year at 7.39%.
Meanwhile, yields on shorter-term bonds closed mostly flat.
Traders said long-term yields were pushed lower in part by news of another drop in the University of Michigan's regular consumer sentiment index. Those who saw the report, which is not made public, said the sentiment index dropped to 76.9 in early July from 81.5 in June.
Declining confidence often suggests further slowing in the economy, which could mean lower interest rates overall.
Also, a new plunge in oil prices gave investors one more reason to expect deflation rather than inflation ahead. On the New York Merc, August light, sweet crude futures settled at $17.21 a barrel, down 46 cents on the day and nearly 4% for the week.
Oil's dramatic drop in recent weeks--to three-year lows--could be only the start of a collapse sending prices down to $15 or even $12 a barrel, some traders say.
They say a deal under consideration at the United Nations that would allow Iraq to sell $1.6 billion worth of oil over six months could inflict far more damage on an already glutted oil market than they first had imagined.
In precious metals trading, gold and silver reacted calmly to oil's slide. The August gold contract on the Comex in New York eased $1 to $392.40. Silver futures added 0.5 cent to $5.05.
In currency trading, the dollar fell against most major currencies, weighed down by worries about the U.S. economy. In New York, the dollar closed at 1.716 German marks, down from 1.721 Thursday. It also closed at 107.60 Japanese yen, down from 108.15.
Market Roundup, D6