A 3.4% drop for Boeing (BA) after a Wachovia downgrade spearheaded the Dow’s 0.70% drop to 12,477 on Monday.

Concerns over forthcoming earnings reports deflated tech stocks, which appear to be experiencing a natural pullback after outperforming all other sectors month-to-date. There are concerns, however, regarding chip maker AMD and software giant Microsoft, both of which are expected to report sub-par results. In AMD’s case, increased quality has led to increased competition from rival Intel. For Miscrosoft, the problems are internal, as the company has failed to deliver its forthcoming Vista operating system on numerous occasions.

Apple, which lost almost 2% on the day, has been slumping since hitting a 52-week high of 97.80 on January 10, the day after it reinvented the phone. Since that time the stock has lost over 11.25%, and closed at 86.79.

Three giants in tech will report earning this week, and here’s the rundown:

• Ebay (EBAY): Wednesday, Ebay will announce its earnings, which are expected to be up 40% from last year, with a 25% increase in sales.
• Microsoft (MSFT): Thursday, Microsoft is expected to disappoint investors with decreased profits, much the same way it has disappointed its users with the delayed release of its next-generation Windows product, Vista. The two are not unrelated, as Microsoft has deferred 1.5 billion in revenue for prepurchased OEM versions of the software until next quarterk, possibly creating a buying opportunity if Thursday’s results are poorer than anticipated.
• AMD (AMD): AMD will announce fourth quarter results Tuesday, revealing exactly how costly the chip wars have been to the Intel (INTC) rival. Intel reported last week that its sales have stabilized and increased steadily after a tumultuous few years of stiff competition from AMD. Further, according to Marketwatch, Intel and Sun Microsystems (SUNW) have reportedly reached an agreement, which would be a hit to AMD, Sun’s sole chip supplier.

In an otherwise lackluster day, Alcoa (AA) announced plans to buyback 10% of its outstanding stock and raise its dividend by 13%, lifting shares to 31.40, up 3.6%.

IBM fell three percent after forecasting 10% earnings growth in 2007, which is lower than investors had anticipated.

For the week, the Dow and the S&P 500 closed nearly flat, while the Nasdaq dropped 2.1%, after disappointments from Intel (INTC) and Apple (AAPL), which closed at 88.50, down 9.4% from last week’s high of 97.80

Stocks ended the day down on anticipation of stable rates from the Fed and oil under $51 a barrel.

Apple (AAPL) fell more than 6%, closing at $89.07, fully 10%
lower than its high a week ago after announcing the iPhone.

Hewlett-Packard (HPQ), IBM, and Intel (INTC) also fell today, despite increased earnings from IBM, an overall decrease in hardware sales weighed down the tech sector.

The Dow, Nasdaq and S&P 500 all retreated a bit from their earlier highs, largely due to an increase in the Producer Price Index and concerns that the Fed, which is supposedly going to ease interest rates, will raise or maintain current rates.

Exxon Mobil (XOM) regained most of its earlier loses for the week, up 1.2%, and a 68% jump in fourth quarter profits helped JP Morga (JPM) gain 0.1%.

Intel (INTC) dropped 5.6% after it announced that fourth quarter profits were down 39%, which led the way for other tech stock declines, IBM, Hewlett-Packard (HPQ), and Apple (AAPL), which released its outstanding earnings after the bell.

Every day you hear it, whether Ben Bernanke had the sniffles or whether one of the Fed governors made a statement about the economy: every investor is afraid that the Fed will act to “slow the economy.”

What exactly do journalists mean by this?

The Federal Reserve is charged with keeping inflation steady, and in order to do so they have control over two major interest rates: the Discount Rate and the Fed Funds Rate. Both are interest rates charged to banks for overnight loans.

The discount rate is the interest rate charged to banks toat loan funds directly from the Federal Reserve.

The Fed Funds Rate is the interest rate charged to banks that borrow from other banks at the Fed.

The Fed Funds Rate is the more important figure, since most banks would prefer to borrow from other banks than directly from the Fed.

While neither of these interest rates directly affect investors, they do affect banks and lending rates across the spectrum. If banks have higher interest for short-term lending, then that will trickle down to their customers having higher rates for lending as well.

The bottom line is, when these interest rates are low, then it is easier to borrow money. If the Fed acts to raise these rates, it is said to be “slowing the economy,” since it gets more expensive (harder) to borrow money as interest rates climb.

This higher interest rate leads to less borrowing and, hence, less spending and a general decrease in business transactions.

So, when some journalist frets about the Fed possibly “slowing the economy” or “Tightening the money supply” (another favorite), what they are really talking about is rising interest rates.

The Dow closed up 26 points Tuesday at 12,582, despite a 1.4% drop for Exxon Mobil (XOM), due to slipping oil prices.

The S&P 500 increased a mere 0.1%, while the Nasdaq dropped 0.2%. Symantec (SYMC) dropped over 13% after earnings came in below expectations.

The Dow Jones Industrial Average gained 41 points to close at 12,556, a new record., closing the week 1.3% up. Exxon Mobil (XOM) was the Dow’s biggest gainer, posting a 2.4% gain, despite the week’s 6% decline in oil prices.
Despite a nearly 10% loss by chip producer AMD, the Nasdaq closed at 2,502, a six-year high, and the S&P 500 logged a five-year high, closing at 1,430.

The bull market that has been in effect for the past couple years has not seen such consistent gains across the indices, and many are talking as if the real surge is yet to come.

The Dow Jones Industrial Average gained 72 today to close higher than ever before, at 12,514.

25 of the 30 stocks in the index were up on the day, with tech stocks Intel (INTC), Hewlett Packard (HPC), and Microsoft (MSFT) leading the way.

Lower oil prices and overall commodities costs have largely been seen to fuel the rally, but the first earnings reports of the year (spearheaded by Alcoa’s 60% rise in year-over-year quarterly profits) have been very promising.

The Nasdaq closed at 2,484, its highest level in six years. Aside from the usual tech suspects, pharmaceutical giants Genentech (DNA), Astrazeneca (AZN), and Bristol-Myers-Squibb (BMY) reacted strongly to positive news.

All the talk from NAIAS is about GM right now: the electric hybrid Volt (possibly to be released in two years’ time),the Saturn Aura and Chevy Silverado winning North American Car and Truck of the year, respectively…

All of this led to Friday’s 3% drop for Toyota ™ and GM’s 2% rise. This sort of short-term attack (or boost, if you’re a GM investor) on your portfolio is just the kind of thing market-timers look for, and everyone is calling TM a buy right now, with after hours trading showing Toyota up and GM down.

Toyota’s market leadership is not likely to be toppled within the next two quarters, and GM’s financial troubles are going to linger on long after the last severance is paid.

Toyota should recover, and quick. Those investors savvy enough to get in on Friday will likely see gains within the next two weeks, while those riding GM’s high tide are taking a far greater risk.