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Stocks Socked Despite Upbeat China Numbers; Apple Falls


NEW YORK ( TheStreet) -- Major U.S. stock averages slumped Friday as persistent worries about the ability of the U.S. to avert the so-called fiscal cliff and deep losses in Apple (AAPL) shares overshadowed encouraging Chinese manufacturing and U.S. industrial output data.

Apple shares sank 3.9% after a Delaware court ruled Thursday that the iPhone infringes upon three patents held by Sony (SNE) and Nokia (NOK) .

Analysts were also playing a part in Apple's decline, with UBS analyst Steven Milunovich cutting his price target to $700 from $780 on lower-than-expected iPhone and iPad shipments in the first calendar quarter.

President Barack Obama and House Speaker John Boehner met Thursday night at the White House to discuss the U.S. budget, their first in-person meeting in four days.

Statements from the White House and Boehner's office both described the talks as "frank," adding that the "lines of communication remain open."

"Enthusiasm for equities continues to be tempered by the lack of progress by the White House and Congress on the fiscal cliff negotiations," said Addison Armstrong, senior director of market research at Tradition Energy.

Michael Lewis, global head of commodities research at Deutsche Bank, said despite the Fed's implementation of QE4, "the market remains focused on the potential adverse liquidity impact of the U.S. fiscal cliff."

"Furthermore, the Fed's targeting of U.S. unemployment as a tool to gauge monetary accommodation could be taken as hawkish given the apparent decline in U.S. unemployment over the past year," added Lewis.

The Dow Jones Industrial Average was fell 36 points, or 0.27%, at 13,135. Friday's dip left the blue-chip index down 0.15% for the week.

Breadth was negative, with laggards outpacing advancers 19 to 11. American Express (AXP) , Microsoft (MSFT) and Merck (MRK) and Disney (DIS) were laggards.

Alcoa (AA) , Caterpillar (CAT) , Cisco (CSCO) and Hewlett-Packard (HPQ) were the top percentage blue-chip gainers.

United Technologies (UTX) shares lost 0.52% after the company provided a 2013 profit outlook of between $5.85 a share and $6.15 a share and sales of between $64 billion to $65 billion; analysts are looking for earnings of $6.12 a share on revenue of $66.4 billion.

The S&P 500 fell 6 points, or 0.41%, at 1414. The S&P shed 0.32% for the week. The Nasdaq decreased 21 points, or 0.70%, at 2971. The tech-heavy index dipped 0.23% for the week.

The technology sector sank 0.95%. Sector decliners in the broader market also included utilities, health care and energy. Basic materials, conglomerates and transportation were among the sector gainers.

Decliners edged advancers 1.1-to-1 on the Big Board, and incrementally on the Nasdaq. Volumes totaled 3.19 billion shares on the New York Stock Exchange and 1.80 billion shares on the Nasdaq.

In economic news Friday on China, the world's second largest economy, the HSBC December flash purchasing managers' index for the country expanded to a 14-month high of 50.9, exhibiting five consecutive months of increases. A reading above 50 signifies growth.

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