Major indexes gave back much of the previous session's gains amid weak earnings from Dell and a mixed batch of economic reports
Stocks fell Friday after Dell (DELL) posted weaker earnings and the release of some mixed economic data.
Traders were also watching the path of Tropical Storm Gustav, wondering how the storm could affect oil prices as it heads for the Gulf of Mexico. However, after rising more than $3 in the morning, October crude oil settled 13 cents lower on Friday at $115.46 per barrel.
On Friday, the Dow Jones industrial average fell 171.22 points, or 1.46%, to 11,543.96. The broader S&P 500 index dropped 17.86 points, or 1.37%, to 1,282.82. And the tech-heavy Nasdaq composite index lost 44.12 points, or 1.83%, to 2,367.52.
Volume was slow. On the New York Stock Exchange, 19 stocks traded lower for every 11 in positive territory. On the Nasdaq, the ratio was 18 to 10 negative.
Major indexes essentially broke even in August. The Dow was off 0.34% and the S&P 500 lost 0.11% in the month. The Nasdaq, however, was up 1.62%.
Dell posted earnings of 31 cents per share, vs. 33 cents a year ago. Wall Street analysts predicted earnings of 36 cents per share. Narrower profit margins offset an 11% rise in revenue. The company says it will incur costs to cut jobs and invest in infrastructure and acquisitions. It expects conservative spending on information technology in the U.S., Western Europe and several countries in Asia. Standard & Poor's equity analysts downgraded the stock from buy to hold.
U.S. personal income fell 0.7% in July, while spending rose 0.2%. Disposable income fell 1.1%, following a 1.9% drop in June. The U.S. savings rate fell from 2.5% in June to 1.2% last month. The PCE deflator rose 0.6%, after rising 0.7% in June.
U.S. consumer sentiment improved to 63 in August, according to the final number from the University of Michigan, up from the preliminary number of 61.7 and from 61.2 in July. Also, the U.S. Chicago purchasing managers index rose to 57.9 in August, from 50.8 in July.
"Consumer sentiment was likely lifted by lower energy prices but we think the outlook for consumer spending in the second half of the year is fairly negative in the face of rising job losses, rising foreclosures, falling home prices, and the ending of temporary stimulus," says John Ryding of RDQ Economics.
Among other stocks in the news Friday, Google (GOOG) chief executive Eric Schmidt told Bloomberg television that his firm will move forward on an advertising partnership with Yahoo (YHOO) despite a U.S. Justice Department probe of the deal.
Microsoft (MSFT) will acquire Greenfield Online (SRVY), the operator of European price-comparison shopping sites, in a $486 million deal.
Qualcomm (QCOM) announced a federal judge found the firm violated injunctions designed to prevent infringement of three patents owned by Broadcom (BRCM).
PetSmart (PETM) posted earnings of 30 cents per share, vs. 35 cents a year ago, as same-store sales were 4% higher and total sales rose 11%. Wall Street analysts were expecting earnings of 28 cents.
Marvell Technology (MRVL) posted earnings of 24 cents per share, vs. 6 cents a year ago, as revenue rose 28%. The firm expects earnings of 24 to 26 cents per share this quarter, but said the U.S. economy was weakening.
Major European stock indexes were mostly higher Friday. In London, the FTSE 100 index gained 0.63% to 5,636.60. In Paris, the CAC 40 index rose 0.47% to 4,482.60. Germany's DAX index edged up 0.03% to 6,422.30.
Major Asian indexes were higher. Japan's Nikkei 225 index rose 2.39% to 13,072.87. In Hong Kong, the Hang Seng index added 1.38% to 21,261.89.
Treasuries were narrowly lower Friday. Two-year notes were unchanged at 100 for a yield of 2.380%, while the 10-year Treasury was off 17/32 to 101-17/32 for a yield of 3.821% and the 30-year bond fell 35/32 to 101-08/32 for a yield of 4.427%.