US STOCKS-Market falls on Microsoft's results, oil's jump

(Updates to midday, changes byline)

By Cal Mankowski

NEW YORK, April 25 (Reuters) - U.S. stocks fell on Friday as disappointing results from Microsoft Corp (MSFT.O: Quote, Profile, Research) weighed on the technology sector and a sharp rise in the price of oil hit industrial shares.

Crude oil futures rose above $119 per barrel after the U.S. Navy provided details of an encounter between a cargo ship chartered by the U.S. military and two small boats believed to be Iranian. For details see [ID:nN25305335]. A report on Iranian television said there was no confrontation.

Shares of heavy equipment maker Caterpillar Inc (CAT.N: Quote, Profile, Research) declined 0.6 percent to $81.34 on the New York Stock Exchange.

Adding to the market's unease, a survey showed U.S. consumer confidence at its weakest point in 26 years in April.

"The oil space has become more and more a drag on market sentiment," said Peter Kenny, managing director at Knight Equity Markets in Jersey City, New Jersey. "We've seen sell-offs in commodities but oil doesn't seem to do that."

Weak Windows software sales and a below-target profit forecast drove Microsoft Corp's (MSFT.O: Quote, Profile, Research) shares down 6.4 percent to $29.77, dragging the Nasdaq lower.

The Dow Jones industrial average .DJI fell 52.76 points, or 0.41 percent, to 12,796.19. The Standard & Poor's 500 Index .SPX dropped 2.13 points, or 0.15 percent, to 1,386.69. The Nasdaq Composite Index .IXIC declined 28.11 points, or 1.16 percent, at 2,400.81.