NEW YORK: Tech shares fell on Wednesday, Aug 17 after Dell's disappointing sales outlook fanned worries weak economic growth will hurt earnings in the third quarter.
The Dow and S&P indices ended little changed in an up-and-down session where investors sold growth sectors in favor of defensive shares like telecoms and utilities.
Computer maker Dell (DELL.O) was the S&P's worst performer, losing 10 percent to $14.20 after cautious comments on spending on TECHNOLOGY [] by the government sector.
Hewlett-Packard (HPQ.N) was also hit, falling 3.7 percent 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.
In after-hours action by tech companies, NetApp Inc (NTAP.O) slumped 14.5 percent to $35.60 after its revenue missed expectations while JDS Uniphase (JDSU.O) lost 3.2 percent to $11.32 following a weak first-quarter outlook.
Retailers slipped following a weak report from Abercrombie & Fitch, despite good news from Target. With 94 percent of S&P companies reporting earnings, 72 percent have beaten expectations.
The Dow Jones industrial average .DJI was up 4.28 points, or 0.04 percent, at 11,410.21. The Standard & Poor's 500 Index .SPX was up 1.12 points, or 0.09 percent, at 1,193.88. The Nasdaq Composite Index .IXIC was down 11.97 points, or 0.47 percent, at 2,511.48.
Concerns that the U.S. 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.
"So with technology concerns, and then more than our fair share of recession concerns and continued concerns about Europe, we're in a real 'three strikes, you're out' situation today with no reason to buy," Colas said.
Both Abercrombie & Fitch (ANF.N) and Deere & Co (DE.N) 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 percent to $64.87 while Deere lost 1.2 percent to $74.26 and was one of the biggest drags on industrial shares. The S&P retail index .RLX fell 0.6 percent.
On the upside, Target Corp (TGT.N) rose 2.4 percent to $50.55 after its profit and forecast topped expectations.
Stocks started the day with solid gains but turned lower by midday. Declining stocks outnumbered advancers on the Nasdaq by about seven to six. On the New York Stock Exchange, three stocks rose for every two that fell.
The day's moves were reminiscent of the sharp downward swings last week after Standard & Poor's downgrade of the United States' top-tier credit rating on August 5. The top two S&P sectors were telecom .GSPL, up 1.6 percent, and utilities .GSPU, up 0.8 percent. Both groups are considered defensive strategies.
Trading volume slowed from last week to 7.24 billion on Wednesday, down from the daily average of approximately 16 billion shares traded last week. - Reuters
The Dow and S&P indices ended little changed in an up-and-down session where investors sold growth sectors in favor of defensive shares like telecoms and utilities.
Computer maker Dell (DELL.O) was the S&P's worst performer, losing 10 percent to $14.20 after cautious comments on spending on TECHNOLOGY [] by the government sector.
Hewlett-Packard (HPQ.N) was also hit, falling 3.7 percent 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.
In after-hours action by tech companies, NetApp Inc (NTAP.O) slumped 14.5 percent to $35.60 after its revenue missed expectations while JDS Uniphase (JDSU.O) lost 3.2 percent to $11.32 following a weak first-quarter outlook.
Retailers slipped following a weak report from Abercrombie & Fitch, despite good news from Target. With 94 percent of S&P companies reporting earnings, 72 percent have beaten expectations.
The Dow Jones industrial average .DJI was up 4.28 points, or 0.04 percent, at 11,410.21. The Standard & Poor's 500 Index .SPX was up 1.12 points, or 0.09 percent, at 1,193.88. The Nasdaq Composite Index .IXIC was down 11.97 points, or 0.47 percent, at 2,511.48.
Concerns that the U.S. 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.
"So with technology concerns, and then more than our fair share of recession concerns and continued concerns about Europe, we're in a real 'three strikes, you're out' situation today with no reason to buy," Colas said.
Both Abercrombie & Fitch (ANF.N) and Deere & Co (DE.N) 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 percent to $64.87 while Deere lost 1.2 percent to $74.26 and was one of the biggest drags on industrial shares. The S&P retail index .RLX fell 0.6 percent.
On the upside, Target Corp (TGT.N) rose 2.4 percent to $50.55 after its profit and forecast topped expectations.
Stocks started the day with solid gains but turned lower by midday. Declining stocks outnumbered advancers on the Nasdaq by about seven to six. On the New York Stock Exchange, three stocks rose for every two that fell.
The day's moves were reminiscent of the sharp downward swings last week after Standard & Poor's downgrade of the United States' top-tier credit rating on August 5. The top two S&P sectors were telecom .GSPL, up 1.6 percent, and utilities .GSPU, up 0.8 percent. Both groups are considered defensive strategies.
Trading volume slowed from last week to 7.24 billion on Wednesday, down from the daily average of approximately 16 billion shares traded last week. - Reuters
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