* Google drops 8 pct after surprising midday earnings release
* Seven of 10 S&P 500 sectors end higher, offset tech weakness
* Verizon and Travelers climb after results
* Dow off 0.1 pct, S&P 500 off 0.2 pct, Nasdaq down 1 pct
By Atossa Araxia Abrahamian
NEW YORK, Oct 18 (Reuters) - U.S. stocks fell on Thursday, with technology stocks hit hard after Google disappointed investors with earnings results that were prematurely released during the trading day.
Google's stock dropped 8 percent - the company's worst day since Jan. 20 - to close at $695 after the Internet giant's third-quarter results showed earnings and revenue fell short of forecasts. Trading of the stock was halted at 12:50 p.m. Trading resumed at 3:20 p.m.
The slide in Google's stock after the midday surprise was the biggest drag on the S&P 500. Tech stocks suffered, with the S&P 500 information technology index losing 1.53 percent. Shares of IBM, which disappointed investors a day earlier, lost 2.8 percent to close at $194.96 and pull the Dow lower.
"It's a huge impact on the market, and especially the tech stocks," said Paul Nolte, managing director at Dearborn Partners in Chicago. "What happened to Google is a continuation in the tech sector of some very poor earnings numbers. But we're not seeing the same lack of performance across the board from other sectors."
Travelers gained 3.6 percent to $73.94 and gave the biggest boost to the Dow after the U.S. property and casualty insurance company posted record operating earnings.
Verizon Communications Inc rose 2.4 percent to $45.78 after the company reported a record quarterly profit. Verizon attributed these gains to its wireless business. It also posted revenue that slightly exceeded expectations.
Morgan Stanley reported better-than-expected adjusted quarterly earnings on Thursday as big gains in its bond trading business boosted its revenue. The stock fell, however, losing 3.8 percent to $17.79.
Technology was by far the day's weakest sector, but seven of the S&P 500's 10 sectors ended the session higher.
Overall, with 19 percent of S&P 500 companies having reported results, quarterly earnings are expected to drop 1.5 percent from a year ago - an improvement from a decline of 3 percent forecast earlier in the week, according to Thomson Reuters data.
After the close, Microsoft reported that its fiscal first-quarter profit fell, hurt by a dip in computer sales running its Windows operating system. Microsoft's stock fell 1.2 percent after the bell. It had closed at $29.50, down 0.3 percent in regular trading.
Philip Morris International was also scheduled to post earnings after the bell on Thursday.
Weak jobs data released on Thursday also weighed on the market. Weekly jobless claims rose to 388,000 - or 32,000 more than analysts expected. A Labor Department official said it appeared that state-level administrative issues were distorting the data.
"On a longer-term basis and non-seasonally adjusted basis, the jobs numbers are in line with where they're been all year. And that's still indicative of very slowly improving employment," Nolte said.
Shares of eBay gained 5.5 percent to $50.83 after S&P Capital IQ raised its target price on the stock by $5 to $53.
The Dow Jones industrial average dipped 8.06 points, or 0.06 percent, to 13,548.94 at the close. The Standard & Poor's 500 Index shed 3.57 points, or 0.24 percent, to 1,457.34. The Nasdaq Composite Index fell 31.26 points, or 1.01 percent, to close at 3,072.87.
Thursday's decline snapped the S&P 500's three-day streak of gains, when it rose 2.3 percent.
Lam Research gained 7.2 percent to $36.01 after Piper Jaffray cut its price target on the wafer manufacturing company's stock to $39 from $45. The brokerage has an "overweight" rating on the stock.