[R]12:30PM New York – U.S. financial and tech stocks disappoint investors and helped market averages to trend lower.[/R]

Dow Jones Industrial Average fell 136.24 to 13,540.34, Nasdaq index dropped 52.97 to 2,746.29, and S&P 500 index declined 19 to 1,500.54.

Merrill Lynch (MER: chart) reported third quarter net loss of $2.82 per share compared to net income of $3.17 per share. Merrill stock fell 5.7% or $3.85 to close at $63.25. The larger than expected loss dragged other brokers lower as well. Lehman fell as low as $3.40 to $54.07, Bear Stearns dropped as low as $110.52, and Goldman Sachs declined to $215.80 before recovering to $219.94.

Ambac Financial Group (ABK: chart) fell 7% or $3.96 to $51.94 after reporting a loss of $3.51 per share compared to profit of $2.95 a year ago.

Legg Mason (LM: chart) dropped $3.55 to $79.90 after it reported that second quarter revenue increased 14% to $1.17 billion and net income increased 24% to $177.50 million or $1.23 per share up 24% from a year ago. Total assets under management increased to $1.012 trillion, an increase of 13% from $891.4 million a year ago.

Moody’s (MCO: chart) declined $1.27 to $46.09 after it recovered from trading as low as $44.71 on earnings warning. The company reported third quarter revenue increase of 6% to $525 million and earnings per share of 51 cents, 7% decline from 55 cents a year ago. Ratings revenue totaled $404.7 million in the quarter, rising 2% from a year ago. Growth in revenue from global corporate finance, financial institutions and public finance ratings was somewhat offset by a 6% decline in global structured finance ratings.

The company guided lower earnings in the press release and said, “we now project the full-year operating margin, excluding any 2007 restructuring charge and the 2006 one-time gain on the sale of Moody’s 99 Church Street building, to decline by approximately 220 basis points in 2007 compared with 2006.

Reported earnings per share in 2007 are now projected to be about flat compared to 2006 results. Excluding any 2007 restructuring charge, the one-time gain on the building sale from 2006 results and the impacts of legacy tax matters in both years, we now expect earnings per share in 2007 to grow in the mid- to high-single-digit percent range.

Reported earnings per share in 2007 are now projected to be about flat compared to 2006 results. Excluding any 2007 restructuring charge, the one-time gain on the building sale from 2006 results and the impacts of legacy tax matters in both years, we now expect earnings per share in 2007 to grow in the mid- to high-single-digit percent range.”

Amazon.com, Inc (AMZN: chart) dropped 15.6% or $15.80 to $85.01 after reporting a sharp increase in sales and earnings after the close yesterday.

Corning (GLW: chart) fell 7.5% or $1.83 to $22.91 after reporting third quarter earnings of 38 cents or $617 million on revenue of $1.553 billion. The sales increased 21%, earnings and earnings per share increased 41% from a year ago. The company guided fourth quarter sales between $1.5 and $1.55 billion and earnings per share between $0.36 and $0.38.

Broadcom (BRCM: chart) plunged $7.80 to $34.26 after reporting profit decline o 75% on higher than expected research and development charges in the mobile telephony market.

Nabors Industries Ltd. (NBR: chart) third quarter net earnings declined 4.5% to $218 million compared with $228.3 million in the year-ago quarter, dragged by falling margins across all business lines. Earnings include one-time gain of $22.3 million earned from disposal of Sea Mar in August.

Earnings per share dropped 25.5% to 76 cents per share from $1.02 per share from a year earlier.

Ryder System (R: chart) reported third quarter net income edged 0.3% higher to $65.5 million from $65.3 million a year ago, including restructuring and pension costs.

Net earnings declined 2% to $67.2 million from $68.8 million a year ago.

Ryder said per share earnings rose 4.7% to $1.11 from $1.06 in the previous year. Excluding restructuring and pension charges, earnings were up 2% at $1.14 from $1.12 in the year earlier period.

The company said it charged $1.7 million net after tax for restructuring and non-cash after tax charge of $3.5 million for pensions.

National Oilwell Varco Inc (NOV: chart) said net earnings jumped 107% to $366 million from $176.6 million from a year earlier and were up 15% on second quarter net earnings of $318.5 million.

Earnings doubled to $1.02 per share from 50 cents per share last year. Over the second quarter, earnings per share rose 15% from 89 cents a year ago.

Demand for drilling equipment, particularly international offshore rigs rose to $8 billion in the Rig Technology unit, up from $7.2 billion at the end of June, said National Oilwell.