Friday, November 20, 2009

Stocks react to Dell earnings debacle

U.S. stocks opened slightly lower Friday, as a bigger-than-expected drop in Dell's latest quarterly earnings weighed on the technology sector, prompting investors to continue moving away from riskier investments and into the safety of the dollar.

The Dow Jones Industrial Average was down five points at 10,329 shortly before 10 am EST. Alcoa was the measure's weakest component, off 1.4%. Caterpillar also fell more than 1%.

Technology components Cisco and Intel were down about 0.7% each, reflecting disappointment across the sector after Dell reported a 54% drop in its fiscal third-quarter profit, missing analysts' estimates on a double-digit drop in revenue. Shares of Dell, which is not a Dow component, tumbled 8% recently.

The technology-heavy Nasdaq Composite fell 0.5%. The Standard & Poor's 500 index declined 0.4%, led by its technology sector.

Friday's small declines cap a week that began on a high note, with the Dow industrials reaching new highs for the year earlier in the week, but has since gone downhill as mixed economic reports and weak forecasts from a number of retailers prompted a move away from riskier equities and into areas of perceived safety.

Friday reflected a continuation of that trend, as the U.S. dollar index climbed 0.6%, while metals and crude oil futures also fell. Crude was recently below $77 U.S., while gold dropped $2.40 to $1,139.50 U.S. an ounce.

Among stocks in focus, builder D.R. Horton fell 6% after reporting a worse-than-forecast $231.9 million quarterly loss. Chairman Donald Horton said market conditions are still challenging. Treasurys were lower recently, with the two-year note down 1/32 to yield 0.711%, and the 10-year note off 5/32 to yield 3.358%.