WASHINGTON (MarketWatch) - Shares of Leap Wireless International Inc. and Windstream Corp. surged in Friday trades after both phone companies posted solid quarterly results, leading the telecommunications sector in mixed trades. Leap narrowed trimmed its net loss and performed better in a weaker economy than Wall Street expected. Its shares leaped more than 8%. Windstream reported higher sales and profit than analyst forecasts, sending its shares 4% higher. Other notable industry movers included Ericsson LM Telephone Co. , up 1.5%, and Qwest Communications International Inc. , which fell 2.5%.

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BOSTON (MarketWatch) -- Drug stocks followed the broader market lower early Friday as shares of Plavix makers Bristol-Myers Squibb and Sanofi-Aventis lost ground on news that Swiss drugmaker Schweizerhill Holdings AG was seeking to put out a generic version of the drug in Europe. The Amex Pharmaceutical Index slid 0.9% to 297.3 and the Amex Biotechnology Index fell 1% to 740.3. Bristol-Myers shares were off 3% at $22.04 while Sanofi shares lost 6% to rest at $36.50.

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SAN FRANCISCO (MarketWatch) -- Oil and gas stocks slipped at the open Friday, breaking lower with the broader market as AIG's $7.8 billion quarterly loss renewed concerns about the health of the U.S. economy, outweighing any lift from crude-oil's spike to $126 a barrel. Early trades sent the Amex Oil Index 0.7% lower to 1,518 points, with the relentless rise in crude prices weighing especially hard on refiners. The Amex Natural Gas Index was off 0.3% at 707.5 and the Philadelphia Oil Services Index shed 0.8% to 328.8 points.

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SAN FRANCISCO (MarketWatch) -- The downgrade of ratings on American International Group could increase borrowing costs for the insurer's big aircraft leasing business ILFC, Chief Executive Martin Sullivan said on Friday during a conference call with analysts. Standard & Poor's downgraded AIG's ratings on Thursday and also cut ILFC to A+ from AA-. "There is a possibility obviously of increased funding costs to a subsidiary like ILFC," he said, according to a transcript of the call. Chief Financial Officer Steven Bensinger also noted that AIG had to post an extra $1.6 billion of collateral to support some of its obligations because of the downgrades.

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SAN FRANCISCO (MarketWatch) -- Technology stocks were mostly in the red in early trading Friday, with losses coming from Cisco Systems Inc. , Microsoft Corp. , Dell Inc. and Apple Inc. . The tech-heavy Nasdaq Composite Index fell 16 points to 2,435, while the Morgan Stanley High Tech 35 Index and the Philadelphia Semiconductor Index each lost ground. The losses were spurred on by broad-market issues involving the insurance and financial sectors.

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BOSTON (MarketWatch) -- Shares of insurance giant American International Group Inc. lost more than 6% in early trading Friday after the company reported a quarterly loss of almost $8 billion on massive write-downs. Citigroup Inc. was up 1% on news Chief Executive Vikram Pandit announced the Wall Street titan plans to trim about $500 billion in noncore assets over the next several years in a bid to shore up its capital base and divest itself of riskier investments. In the broader financial sector, the Select Sector SPDR Financial ETF slipped 0.3%, the KBW Bank ETF was off 0.4% and the Amex Securities Broker/Dealer Index lost 0.5%.

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NEW YORK (MarketWatch) - Retail shares headed lower Friday after oil prices again probed new highs. Circuit City Stores Inc. shares jumped after it said it would allow Blockbuster Inc. and the video rental chain's largest shareholder Carl Icahn to pursue due diligence in Blockbuster's bid to acquire Circuit City. The S&P Retail Index fell 0.3% to 393.98. Circuit City jumped 8.1%.

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NEW YORK (MarketWatch) - U.S. stocks thudded lower at Friday's start as the financial sector spouted more leaks as American International Group Inc. reported a $7.8 billion loss and Citigroup Inc. unveiled plans to shed about half a trillion dollars in assets. The Dow Jones Industrial Average fell 102.99 points to 12,763.79. The S&P 500 fell 10.75 points to 1,386.95. The Nasdaq Composite shed 16.97 points to 2,434.27.

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SAN FRANCISCO (MarketWatch) -- The market for highly structured credit products exposed to residential mortgage securities hasn't rebounded, American International Group Chief Financial Officer Steven Bensinger said on Friday during a conference call with analysts. "If you look at the commercial mortgage-backed securities market, that has certainly done somewhat better in the second quarter so far than in the previous few quarters," he explained. "However, in the highly structured credit market with residential mortgage, subprime and Alt-A securities, we don't see any precise evidence to date that those markets have rebounded." The closely watched ABX index, which has become a kind of benchmark for subprime mortgage securities, has recovered recently. But that "is not a good measure of what's happening in our portfolios," Bensinger stressed.

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NEW YORK (MarketWatch) -- Airline shares were getting whooped early Friday as oil futures rallied to pass $126 a barrel for the first time. The Amex Airline Index shed 2.4% to 21.43 points with all but two of its 14 components trading down. The all-time low for the index was struck in April at 19.92 points. Crude for June delivery soared as high as $126.20, pushed by a weaker dollar and concerns over supply disruptions. Major carriers were getting the brunt of it, with American Airlines parent AMR Corp. down 4.2% to $7.94, Continental off 3.1% to $16.33, and Delta losing 2.7% to $7.35. Flat lining were shares of Alaska Airlines and Gol Linhas .

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NEW YORK (MarketWatch) -- Crude-oil futures blitzed past the $126 a barrel mark Friday, rallying to a record high of $126.20, pushed higher by weakness in the U.S. dollar and concerns over supply disruptions. Crude oil for June delivery was last up $2.18 at $125.87 a barrel on the New York Mercantile Exchange.

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NEW YORK (MarketWatch) -- Media company E.W. Scripps said Friday that its board has approved a plan to separate the company into two publicly traded entities, effective July 1. One company, called Scripps Networks Interactive, will focus on lifestyle media and interactive services, and the other, called E.W. Scripps, will focus on local media franchises, the company said. The transaction still faces some conditions, including a ruling from the Securities and Exchange Commission and approval from the controlling class of shareholders. If those conditions are met, shareholders of record as of June 16 will receive one share of Scripps Networks Interactive stock on July 1 for each share of stock they own in E.W. Scripps. The board of directors also approved a one-for-three reverse stock split for E.W. Scripps shares that will take effect July 16 pending shareholder approval.

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NEW YORK (MarketWatch) -- The dollar regained some ground, but remained weaker overall against major currencies early on Friday after news that the U.S. trade deficit narrowed in March, in a sign of weaker global growth. The dollar index, which measures the U.S. currency against a basket of major currencies, was down 0.4% at 73.20, compared with 73.15 ahead of the data. The dollar rose slightly against the euro, which stood at $1.5442, compared to $1.5448 ahead of the data. Against the yen, the dollar was at 103.86, compared with 103.07. In a sign of weaker global growth, both imports and exports fell sharply in March, driving the U.S. trade deficit down to $58.2 billion, the Commerce Department reported Friday.

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NEW YORK (MarketWatch) -- Circuit City Stores Inc. said Friday that it has retained Goldman Sachs & Co. to help the company in exploring strategic alternatives. The Richmond, Va., consumer electronics holding company hasn't determined to pursue any particular alternative at this time. The company also confirmed it received a letter from Blockbuster Inc. responding to Circuit City's request for information concerning Blockbuster's ability to successfully finance its proposal to acquire Circuit City and ability to secure the necessary shareholder approval. The letter to Circuit City said investor Carl Icahn and entities affiliated with him "stand ready" to purchase Circuit City if Blockbuster were unable to receive financing or required shareholder approval to do so after satisfactory due diligence. The company stated that this written commitment answers some of its questions with regard to Blockbuster's and Icahn's previous disclosures and accordingly it will allow Blockbuster and Icahn to conduct additional due diligence. Also on Friday, Circuit City Stores and Wattles Capital Management reached an agreement under which Circuit City's board will select three of Wattles Capital's director nominees and include them as nominees of the board at Circuit City's 2008 annual meeting.

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SAN FRANCISCO (MarketWatch) -- American International Group executives said on Friday that the insurer's troubled portfolio of super senior collateralized debt obligations (CDOs) is in "run off." The total net exposure of AIG Financial Products, the insurer's derivatives unit, was $469.5 billion at the end of March, with $77.5 billion of that related to different types of CDOs, the company disclosed. "The portfolio is essentially in run off and during the quarter the notional exposure in the portfolio declined by almost $58 billion," Chief Financial Officer Steve Bensinger said during a conference call with analysts.

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