US STOCKS-Wall St falls on tech outlook worries

                                
 * Chipmakers weigh on Nasdaq
                                
 * Exxon Mobil profit tops estimates, shares still slip
                                
 * Fed's Bullard warns of Japan-like quagmire
                                
 * Indexes down: Dow 0.3 pct, S&P 0.4 pct, Nasdaq 0.6 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
  (Updates to close)
                                
 By Edward Krudy
                                
 NEW YORK, July 29 (Reuters) - U.S. stocks sagged in
volatile trading on Thursday after weak outlooks from
technology companies and downbeat comments from a Federal
Reserve official gave investors little reason to buy.
                                
 The market has struggled to make headway this week. The S&P
500 fell for a third straight day and has run into resistance
around its 200-day moving average as investors searched for a
catalyst to take stocks higher.
                                
 Friday's Commerce Department report on second-quarter gross
domestic product will be another marker for the strength of the
recovery, which appears to be losing steam after several weak
economic reports.
                                
 Investors took advantage of early declines on Thursday to
bargain hunt, particularly in the technology sector, which had
fallen over 1 percent after tech firms Nvidia Corp <NVDA.O> and
Symantec Corp <SYMC.O> gave weak outlooks.
                                
 But the PHLX Semiconductor Index <.SOXX> bounced off a
session low near its 200-day moving average, watched by
investors to determine market movement.
                                
 "Any time you have a pullback like today, it's going to
look like a very good entry point," said Craig Ellis, managing
director of Caris & Company in San Francisco. "Investors have
shown a lot of interest in adding to well-positioned, big-named
stocks, but were looking for a good entry point."
                                
 The index was still down 1.9 percent but was up 6 percent
for July.
                                
 The Dow Jones industrial average <.DJI> dropped 30.72
points, or 0.29 percent, to 10,467.16. The Standard & Poor's
500 Index <.SPX> dropped 4.59 points, or 0.41 percent, to
1,101.54. The Nasdaq Composite Index <.IXIC> dropped 12.87
points, or 0.57 percent, to 2,251.69.
                                
 On the economy, St. Louis Federal Reserve Bank President
James Bullard said he is worried about the risks the United
States could fall into a Japan-style quagmire of falling prices
and investment. That pressured stocks before a late session
rebound.
                                
 "Any time you make the comparison that the U.S. might look
like Japan that has to be considered a negative," said Michael
Sheldon, chief market strategist at RDM Financial in Westport,
Connecticut.
                                
 Friday's GDP number is widely expected to show U.S.
economic growth slowed in the second quarter as some investors
fret about the possibility of a double-dip recession.
                                
 Michael James, senior trader at Wedbush Morgan in Los
Angeles said the market still remains in an uptrend with strong
support around 1,100 on the S&P 500. "The bulls are still in
control of the market right now," he said.
                                
 Nvidia and Symantec cut expectations for the next quarter,
raising questions about demand for technology components and
contributing to concerns that the economic growth is slowing.
                                
 Nvidia fell 9.9 percent to $9.13, and Symantec dropped 11.2
percent to $13.03.
                                
 The PHLX semiconductor index <.SOXX> fell as much as 2.8
percent on Thursday, its largest percentage decline in nearly
two weeks, taking the index near its 200-day moving average.
The 200-day average, now near 348, served as resistance on July
20.
                                
 "We've had a SOXX that's been trapped in the trading range
between 330 and 370, and just a few days ago we were toward the
higher end of that range," Ellis said. "We finally got some bad
news so we've sold off back toward the middle of that range."
                                
 The index hit a five-week closing high just below 370 on
Monday.
                                
 Exxon Mobil Corp <XOM.N>, the S&P's largest company by
market capitalization, fell 0.9 percent to $60.34 after
reporting a better-than-expected quarterly profit.
[ID:nN29213001]
                                
 Consumer staples also fell, with the S&P consumer staple
index down 1.1 percent after Kellogg Co <K.N> lowered its
outlook. Its shares fell 6.9 percent to $47.98.
[ID:nN29224656]
                                
 Through Thursday morning, 60 percent of companies in the
S&P 500 have reported quarterly earnings, with 75 percent of
companies beating expectations and 35.1 percent year-over-year
earnings growth.
                                
 But companies' forecasts for the third and fourth quarters
have frequently missed Wall Street's expectations.
                                
 "Earnings are looking good, but confidence in the future is
missing," said Gail Dudack, chief investment strategist at
Dudack Research Group in New York.
 (Reporting by Edward Krudy; Additional reporting by Matthew
Lynley, Rodrigo Campos and Leah Schnurr; Editing by Kenneth
Barry)