Dow Erases Gains as Microsoft, Travelers Skid

Stocks erased their gains Friday as Microsoft, Travelers and Verizon weighed on the Dow after disappointing investors with their latest results.

Stocks had struggled from the start, then rebounded after a report showed new-home sales soared last month. But the momentum wasn't strong enough and stocks soon resumed their descent.

Energy, materials and utilities were the best performers, while telecoms, consumer staples and consumer discretionary were the weakest links.

New-home sales shot up 26.9 percentlast month, the largest year-over-year increase in nearly five years, as buyers jumped in to take advantage of the first-time homebuyers' tax credit. February's bad weather may have also played a role, pushing some sales into March. Sales dropped 4.1 percent in February.

Homebuilders got a big boost from the report, with Lennar, Pulte and Beazer all up more than 5 percent.

This came after an earlier report showed durable-goods orders excluding transportation jumped 2.8 percentin March, the largest rise in more than two years. Durable goods are big-ticket items like appliances, cars and planes. Transportation orders tend to be very volatile — as one company's large order or lackthereof can skew the headline number — so stripping them out offers a better indication of demand.

The dollar gained against the euro and yen after the durable-goods report. Both oil and gold fell.

Greece officially asked for aid from the IMF and European Union today and is negotiating the terms. The move brought some relief to the market, as the issue has been hanging over the market for months, but some investors worried the size of the package may not be enough.

"I've been amazed that the (European Union) has withstood the pressures it has thus far. I'm afraid that it won't be able to stand much longer," Dennis Gartman, founder of The Gartman Letter, told CNBC.

"Trying to get this passed by all of the members of the monetary union, when you have Portugal, Spain, Italy in the same circumstance, it's going to be very hard for anybody to get it passed," Gartman said.

On the earnings front, Microsoft , American Express , and Amazon all delivered after-the-bell numbers. Investors were disappointed with forecasts from Amazon and with growth rates at Microsoft, while pleased with results at American Express.

This morning, Travelers missed expectations, while Honeywell and Xerox beat.

Verizon was the biggest drag on the Dow, down over 1 percent, after the telecom giant on Thursday reported its wireless growth slowed in the latest quarter.

Telecoms overall were among the weakest performers after disapppointing outlooks earlier in the week from Qualcomm and Nokia and worries about AT&T's subscriber growth.

Meanwhile, Apple hit another new high for the year, topping $272.

Other weak sectors included consumer staples and utilities.

US-traded shares of Ericsson jumped more than 5 percent after the Swedish phone maker missed its earnings target but investors bet on the company's prospects.

In other news, CtW Investment Group asked regulators to probe insider transactions by executives at CVS Caremark . CVS says the group's allegations are without merit.

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