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Disappointing quarterly results from Google combined with mixed economic reports dragged the benchmarks into negative territory. As for domestic economic readings, initial claims increased more than expected from the previous week, while Philadelphia Fed's monthly manufacturing report revealed business activity had jumped in October after contracting for five consecutive months.

The Dow Jones Industrial Average (DJI) lost 0.1% to close the day at 13,548.94. The Standard & Poor 500 (S&P 500) slipped 0.2% to finish yesterday’s trading session at 1,457.34. The tech-laden Nasdaq Composite Index inched down 1% to end at 3,072.87. The fear-gauge CBOE Volatility Index (VIX) lost 0.3% to settle at 15.03. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.9 billion shares, slightly higher than the year-on-year daily average of 6.52 billion. The decliners on the New York Stock Exchange outpaced the advancing stocks; as for 47% stocks that gained, 49% stocks closed lower.

Google Inc (NASDAQ:GOOG), the world’s leading internet search engine, delivered a surprise, reporting its quarterly reports before the closing bell, which revealed that earnings had dropped way below analysts’ estimates. Following the disappointing results, the company’s shares slumped 10.5% and trading was briefly halted. At the end of the trading day, Google’s shares were down 8% and closed at $695.00 per share. According to Google, the unexpected decline in its third-quarter earnings was due to weakness in its core internet advertising business and continual losses from its recently acquired cell phone business, Motorola Mobility. Google’s core internet business has fallen below 20% for the first time since 2009.

The technology sector has witnessed several discouraging results from its bellwethers. Earlier, Intel Corporation (NASDAQ:INTC) and International Business Machines Corp. (NYSE:IBM) had reported weak numbers. IBM’s revenues declined 5.4% from the year-ago quarter and all of the company’s operating segments suffered a downtrend. On the other hand, Intel, the world’s largest chip maker, had provided a weak revenue outlook. The Technology Select Sector SPDR fell 1.2% yesterday. Stocks such as IBM, Intel, Oracle Corporation (NASDAQ:ORCL), Microsoft Corporation (NASDAQ:MSFT) and Nuance Communications Inc. (NASDAQ:NUAN) lost 2.8%, 0.6%, 0.4%, 0.3% and 4.0%, respectively.

Meanwhile, the U.S. Department of Labor said initial claims increased more than expected from the previous week. According to the report, the advance figure for seasonally adjusted initial claims increased by 46,000 to 388,000 from the prior week’s 342,000 for the week ending October 13. This was above consensus estimates of 361,000.

Separately, the Federal Reserve Bank of Philadelphia released monthly business activity data, which revealed that business activity increased to 5.7 from minus 1.9 in September. This also compared favorably with consensus estimates which had projected an increase to 1. This is the first positive reading since April 2012. However, the demand for manufacturing goods declined by 2 points to -0.6. The employment component of the index is at its lowest level since September 2009.

Meanwhile, Morgan Stanley (NYSE:MS) reported better-than-expected third-quarter earnings, which was boosted by revenue from bond trading. However, its shares tumbled by 3.3%, much like the drop in stocks of JPMorgan Chase & Co. (NYSE:JPM) and Goldman Sachs Group, Inc. (NYSE:GS) after they reported better-than-expected results.

However, the financial sector finished in the green yesterday and the Financial Select Sector SPDR rose 0.2%. Stocks such as Wells Fargo & Company (NYSE:WFC), KeyCorp (NYSE:KEY), Goldman Sachs, U.S. Bancorp (NYSE:USB) and Shinhan Financial Group Co., Ltd (NYSE:SHG) gained 0.3%, 4.4%, 0.2%, 0.6% and 1.0%, respectively.

Meanwhile Consumer Staples Select Sector SPDR was the major loser, slipping 0.6%.  Stocks such as Philip Morris International Inc. (NYSE:PM), Vector Group Ltd, British American Tobacco PLC, Reynolds American, Inc. (NYSE:RAI) and Altria Group, Inc. (NYSE:MO) lost 4.2%,1.1%,1.4%, 0.8% and 1.2%, respectively.

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