Tough day, strong week
Major gauges slump in late-session selloff Friday, with tech especially week after Dell's outlook.
By Alexandra Twin, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) - Dell's disappointing outlook and rising oil prices were among the catalysts sending stocks lower Friday, at the end of an otherwise upbeat week for the stock market.

A jump in a key inflation indicator and skittishness ahead of a three-day weekend also weighed on investor sentiment.

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The Nasdaq composite (down 12.27 to 2,282.36, Charts) lost about 0.5 percent.

The Dow Jones industrial average (down 5.36 to 11,115.32, Charts) ended little changed and the Standard & Poor's 500 (down 2.14 to 1,287.24, Charts) index lost 0.2 percent.

Nonetheless, it was an up week for stocks, with all three major gauges posting solid gains and the Dow industrials hitting a 4-1/2 year high.

"The fact that the Dow crossed 11,000 this week and held it is important for sentiment," said Donald Selkin, director of research at Joseph Stevens.

Even Friday's declines were pretty minimal, Selkin added, considering the day's onslaught of negative news.

While that positive sentiment is likely to remain in place, stocks could be due for a bit of a pullback in the week ahead, he added.

"I think we'll consolidate around these levels, maybe pull back a bit next week, but nothing much," Selkin said.

All financial markets are closed Monday for the President's Day holiday.

Later in the week, earnings are due from Home Depot and Wal-Mart Stores. Economic reads are expected on leading economic indicators, consumer prices and durable goods orders. The minutes from the last Federal Reserve policy meeting are expected Tuesday.

Friday's market

The tech sector was under pressure all day following Dell's earnings outlook. However, the broader market made a few recovery attempts, with the Dow briefly touching a fresh 4-1/2 year high.

However, any recovery attempts met resistance heading into the close of the session, with investors perhaps wanting to step back ahead of the long weekend.

"We're at a point where it's very hard to keep the momentum positive, and Dell is not helping," said Maria Fiorini Ramirez, president of money manager Maria Fiorini Ramirez Inc.

Dell (down $1.58 to $30.38, Research) sank almost 5 percent after issuing a current-quarter earnings and revenue forecast that was short of Wall Street predictions. The warning, issued late Thursday, overshadowed the PC maker's report that quarterly earnings and revenue rose from a year earlier and topped estimates. (Full story.)

The Dell news weighed on other big tech companies, including chipmakers Advanced Micro Devices (down $1.41 to $40.33, Research) and Intel (down $0.74 to $20.61, Research).

The broader chip sector slumped as well, with the Philadelphia Semiconductor (down 10.54 to 535.41, Charts) index, or SOX, losing almost 2 percent.

The SOX and the Nasdaq often move in tandem.

Another tech company -- software maker Intuit (down $5.55 to $49.25, Research) -- warned that third-quarter earnings and revenue will miss forecasts and that full fiscal 2006 numbers could miss. That overshadowed the company's otherwise positive quarterly earnings report.

Shares fell over 10 percent.

RadioShack (down $1.67 to $19.08, Research) slumped 8 percent after reporting lower quarterly earnings that missed estimates, and outlining a restructuring plan that includes shutting up to 700 stores.

Earlier in the week, the electronic chain's chief executive admitted he had incorrectly stated his academic credentials.

Time Warner (down $0.19 to $17.78, Research) -- the parent of CNNMoney.com -- inched lower on reports that Carl Icahn is giving up his battle for control of the company due to settlement talks.

After the close, it was confirmed that a deal was reached between the world's largest media company and Icahn, who leads a group that owns about 3 percent of the company. (Full story).

Among stock gainers, the recovery in oil prices gave energy investors a reason to jump back into oil stocks. The Amex Oil (up 11.85 to 1,046.30, Charts) index gained 1.1 percent and was one of the session's best performers.

Market breadth was mixed. On the New York Stock Exchange, losers beat winners nine to seven on volume of 1.56 billion shares. On the Nasdaq, decliners beat advancers by five to four on volume of 1.95 billion shares.

Core inflation jumps

Investors also took in the morning's Producer Price Index (PPI), which showed a bigger-than-expected jump in January at both the core and overall level.

The report may have played into inflationary fears, particularly with new Federal Reserve Chairman Ben Bernanke testifying this week that future interest-rate hikes will be influenced by the data.

A separate report showed a surprise drop in consumer sentiment in early February, according to a University of Michigan survey.

U.S. light crude oil rose but ended the session under $60 a barrel, a key psychological level. Crude for March delivery added $1.29 to settle at $59.75 a barrel on the New York Mercantile Exchange, a gain of more than two percent.

Longer-dated treasury prices gained in a shortened pre-holiday session, lowering the yield on the 10-year note to 4.56 percent from 4.58 percent late Thursday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell versus the euro and jumped versus the yen.

COMEX gold for April delivery added $5.80 to settle at $554.60 an ounce.

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