Apple, other tech stocks weigh on Wall Street

(Reuters) - Wall Street declined on Wednesday as the technology sector fell on disappointing results from giants including APPLE (AAPL.NQ) but major indexes were off earlier lows.

Apple shares slumped 4.6 percent to $124.80, a day after the iPhone maker's revenue forecast for the fourth quarter fell below expectations, putting the stock on track for its biggest percentage drop since January 2014.

The world's largest publicly-traded company was the biggest drag on all three major indexes and contributed nearly 40 points to the Dow's overall decline. The S&P technology sector fell 1.6 percent as the worst performing of the 10 major S&P sectors.

Microsoft dropped 4.2 percent to $45.29 after reporting its biggest-ever quarterly loss, as the company wrote down its Nokia phone business and demand fell for its Windows operating system.

"We are getting a little bit of indigestion in the market over the past two sessions from tech earnings," said David Schiegoleit, managing director of investments at the Private Client Reserve of U.S. Bank in Los Angeles.

"We stepped right into the beginning of this week with IBM disappointing, followed by Microsoft, Apple and a couple of others, so we are just getting a little bit of heartburn in the market from those earnings releases on the tech side."

Yahoo shed 0.5 percent at $39.55 after it forecast lower-than-expected revenue for the current quarter as it struggles to revive its core online advertising business.

While markets remain near record highs, June-quarter earnings of S&P 500 companies are expected to dip 1.5 percent, according to Thomson Reuters data, well below the 5.9 percent gain forecast on Jan. 1, but up from the 3 percent decline expected at the start of July.

Of the 102 companies to report earnings through Wednesday morning, 70 percent have beaten analyst expectations, matching the rate over the past four quarters and above the 63 percent average beat rate since 1994.

However, only 55 percent have topped revenue forecasts, below the 61 percent average beat rate since 2002. U.S. companies are expected to post their worst sales decline in nearly six years in the second quarter, in part due to the strong dollar that reduces the value of U.S. companies' overseas income.

The Dow Jones industrial average fell 64.17 points, or 0.36 percent, to 17,855.12, the S&P 500 lost 3.34 points, or 0.16 percent, to 2,115.87 and the Nasdaq Composite dropped 28.82 points, or 0.55 percent, to 5,179.30.

Shares in housing companies were a bright spot, with the PHLX housing sector index up 1.7 percent after data showed home resales rose to their highest level in nearly 8-1/2 years in June. Lennar Corp gained 2.6 percent to $53.36.

Declining issues outnumbered advancing ones on the NYSE by 1,716 to 1,322, for a 1.30-to-1 ratio on the downside; on the Nasdaq, 1,398 issues rose and 1,351 fell for a 1.03-to-1 ratio favoring advancers.

The S&P 500 posted 34 new 52-week highs and 40 new lows; the Nasdaq recorded 95 new highs and 127 new lows.

(Reporting by Chuck Mikolajczak; Editing by Nick Zieminski)