Tech shares down on Dell sales outlook

Dow Jones: 11,410.21 (+4.28) SP 500: 1,193.88 (+1.12) Nasdaq: 2,511.48 (-11.97):TECH SHARES fell on yesterday after Dell's disappointing sales outlook fanned worries weak economic growth will hurt earnings in the third quarter.

The Dow and SP indices ended little changed in an up-and-down session where investors sold growth sectors in favour of defensive shares like telecoms and utilities.

Computer maker Dell was the SP’s worst performer, losing 10 per cent to $14.20 after cautious comments on spending on technology by the government sector.

Hewlett-Packard was also hit, falling 3.7 per cent to $31.39 and weighing on the Dow as investors also worried business spending could decline in coming quarters.

“You don’t usually see tech down so sharply while the rest of the market is down less, which shows that the latest earnings have created a lot of concerns,” said Nicholas Colas, chief market strategist at the ConvergEx Group in New York.

Retailers slipped following a weak report from Abercrombie Fitch, despite good news from Target. With 94 per cent of SP companies reporting earnings, 72 per cent have beaten expectations.

The Dow Jones industrial average was up 4.28 points, or 0.04 per cent, at 11,410.21. The SPoor’s 500 Index was up 1.12 points, or 0.09 per cent, at 1,193.88. The Nasdaq Composite Index was down 11.97 points, or 0.47 per cent, at 2,511.48.

Concerns that the US economy may be headed for another recession and that Europe may be unable to stem its financial troubles have hit the market, with a strong earnings season one of the few bright spots for traders, though they often have not been enough to offset macroeconomic woes.

Both Abercrombie Fitch and Deere Co slumped on disappointing margins news. Abercrombie also raised concerns about the consumer response to higher prices going into the crucial back-to-school shopping season.

Abercrombie dropped 8.7 per cent to $64.87 while Deere lost 1.2 per cent to $74.26 and was one of the biggest drags on industrial shares. The SP retail index fell 0.6 per cent.

On the upside, Target rose 2.4 per cent to $50.55 after its profit and forecast topped expectations. – (Reuters)