Coupled with lower-than-expected results for the latest quarter, Microsoft's reduced forecast sent its stock falling more than 11 percent and led a broader decline in the Nasdaq composite index.

The earnings disappointment overshadowed news that the gross domestic product grew 4.8 percent last quarter, up from a 1.7 percent rise in the fourth quarter. The gain was less than economists' estimates of 4.9 percent, which suggested the economy is expanding at a comfortable pace.

But while the GDP's inflation component surged 3.3 percent — well ahead of a 2.7 percent target — the Labor Department said employment costs grew just 0.6 percent last quarter, the smallest rise since 1999 and behind views of 0.9 percent.

Art Hogan, chief market analyst for Jefferies & Co., said the economic data were benign for inflation and the debate over interest rates, and noted a recovery among commodities and energy prices.

"With that as a backdrop, I'm not surprised to see" the Nasdaq down and little changes in the other major indexes, Hogan said. "Of course, when you have a marquee name like Microsoft disappoint, it's hard to sit up on good news."

The Dow Jones industrial average dropped 15.37, or 0.14 percent, to 11,367.14.

Broader stock indicators ended mixed. The Standard & Poor's 500 index added 0.89, or 0.07 percent, to 1,310.61, and the Nasdaq fell 22.38, or 0.95 percent, to 2,322.57.

Bonds climbed on the GDP data, with the yield on the 10-year Treasury note slipping to 5.07 percent from 5.11 percent late yesterday. The dollar was mixed against other major currencies, and gold prices surged.

Crude futures recovered from four days of losses, lifted by supply worries after the International Atomic Energy Agency said Iran defied the U.N. Security Council by enriching uranium. A barrel of light crude rose 91 cents to settle at $71.88 on the New York Mercantile Exchange.

Wall Street also weighed a dip in consumer confidence as soaring gasoline prices threatened discretionary spending. The University of Michigan's April consumer-sentiment index slid 1.8 points to 87.4, while economists expected a 0.2-point drop.

Erratic trading left the major indexes flat for the week, with the Dow gaining 0.17 percent and the S&P 500 off 0.05 percent. The Nasdaq lost 0.87 percent after today's decline gave back most of its advance from earlier in the week.

For the month, however, the Dow jumped 2.32 percent and the S&P 500 added 1.22 percent, while the Nasdaq slid 0.74 percent. The Dow and S&P 500 earned much of their April gains from recent indications that the Federal Reserve may soon pause or halt its series of interest rate hikes.

Analysts say the overall mood of the market has improved as government reports continue painting an uplifting picture of the economy. Now that the Fed may have boosted rates just enough to stifle demand, the market is looking for growth to gently taper in the latter half of the year, said Ed Keon, chief investment strategist for Prudential Equity.

"There's still some danger that inflation could pick up, and higher energy prices could feed into that," Keon said. "But overall, it does not look like substantial inflationary pressures are developing."

Software giant Microsoft's earnings saddled the tech sector, and its shares fell $3.10 to $24.15.

Citigroup Inc. gave the Dow some support after Piper Jaffray upgraded the financial services firm to "outperform," citing improving margins and a pickup in the capital markets. Citigroup rose $1.80 to $49.95.

Prudential Equity's upgrade of the banking sector lifted stocks elsewhere, with JPMorgan Chase & Co. adding $1.43 to $45.38, and Bank of America Corp. rising 88 cents to $49.92.

Chevron Corp. was the latest U.S. oil company to post a strong quarterly profit, which jumped 49 percent to $4 billion as high energy prices propelled its results. Chevron gained $1.04 to $61.02.

UnitedHealth Group Inc. rose $1.99 to $49.74 following a government report that the health insurer landed the biggest share of participants — about 27 percent of overall enrollment — in the new privately administered Medicare drug program.

Advancing issues led decliners by 19 to 13 on the New York Stock Exchange, where volume of 1.8 billion shares lagged the 2.09 billion shares changing hands at the same point yesterday.

The Russell 2000 index of smaller companies rose 3.14, or 0.41 percent, to 764.54.