Wall Street weighed down by Dell profit warning

NEW YORK, July 21, 2006 (AFP) – Wall Street shares ended lower Friday, weighed down by a profit warning from computer giant Dell and amid ongoing concerns about the violence in the Middle East.

The Dow Jones Industrial Average dropped 59.72 points (0.55 percent) to 10,868.38 while the technology-weighted Nasdaq index closed 19.03 points weaker (0.93 percent) at 2,020.39.

The Nasdaq market is at its lowest level since May 2005.

The broad-market Standard and Poor’s 500 index shed 8.84 points (0.71 percent) to 1,240.29.

Traders said Dell’s announcement had affected sentiment, particularly in the technology sector despite better-than-expected earnings reports earlier this week from Microsoft and Google.

However, Dell’s announcement came a day after the Ford Motor Co. announced a surprise quarterly loss of 123 million dollars.

"Clearly the Dell results are coming as a surprise, it’s definitely what is weighing on the tech sector today," said SG Cowen analyst Mike Malone.

"I think the tech sector will continue to be under pressure until there’s some evidence that there’s some resurgence of growth," Malone said.

Dell is due to announce its latest results on August 17. Shares in the computer group were pummelled by investors, as they closed down 2.19 dollars, or 9.9 percent, at 19.91 dollars.

Some of the bearish sentiment appeared linked to the ongoing hostilities in the Middle East, as Israeli continues its military bombardment of Lebanon following Hezbollah’s capture of two soldiers.

But traders also expressed concern about US economic growth.

"There is no real incentive to buy stocks ahead of the weekend. No one knows what is going to happen on the geopolitical front," said Marc Prado, a Cantor Fitzgerald analyst.

"Investors generally expected that the corporate spending during the first quarter would drive growth. Nothing suggests that it’s going to happen. We don’t see the economic growth that everyone was expecting," Prado added.

Among other key stocks, Microsoft rose 1.02 or 4.5 percent to 23.87 after the software giant reported profits late Thursday that fell 24 percent from a year ago but topped Wall Street expectations.

Google meanwhile rallied 2.98 or 0.7 percent to 390.11 as the market digested news that the Internet search giant had doubled its quarterly earnings on strong revenue growth.

In other news, Morgan Stanley said the US Securities and Exchange Commission has requested testimony from its chief executive, John Mack, as part of a probe into possible insider dealing.

Mack’s testimony is being sought by regulators probing the hedge fund Pequot Capital. Mack was a former chairman of Pequot, before taking the helm at Morgan Stanley last June.

The bank’s stock closed down 83 cents, or 1.3 percent, at 62.51 dollars.

Oil prices, which have pressured stock gains this week, closed slightly higher in New York, at 74.43 dollars a barrel.

Oil giant ExxonMobil, which releases its quarterly earnings next Thursday, closed 32 cents lower, or 0.5 percent, at 63.93 dollars while ConocoPhillips closed down 80 cents, or 1.2 percent, at 63.63 dollars.

Bonds prices dipped as the yield on the 10-year US Treasury bond climbed to 5.045 percent from 5.028 percent on Thursday, while that on the 30-year bond rose to 5.103 percent from 5.082 percent.

Bond yields and prices move in opposite directions.