US stocks: Market hit on record oil, Dell outlook

NEW YORK - US stocks closed lower on Friday as oil prices hit a new record for the fifth straight day, spurring concerns that higher energy costs will hurt corporate profits, while a weak revenue outlook from computer maker Dell Inc. pressured technology shares.

Crude prices surged to US$67.10 to mark the highest spot-month contract price since NYMEX began trading crude oil futures in 1983.

Shares of Dell, the world's largest maker of personal computers, dropped 7.4 per cent to US$36.64, its biggest one-day percentage drop in almost four years. Dell was the heaviest drag on Nasdaq.

The Dow Jones industrial average ended down 85.58 points, or 0.80 per cent, at 10,600.31. The Standard & Poor's 500 Index fell 7.42 points, or 0.60 per cent, to 1,230.39. The technology-laced Nasdaq Composite Index was down 17.65 points, or 0.81 per cent, at 2,156.90.

Despite their slides on Friday, the Dow and S&P 500 closed in positive territory for the week. The Dow rose 0.4 per cent and the S&P 500 advanced 0.32 per cent.

On Friday, computer hardware was one of the hardest hit sectors in the Standard & Poor's 500, with Dell rivals Gateway Inc. falling 1 per cent to US$3.81 and Hewlett-Packard Co. slipping nearly 1 per cent to US$24.03.

"Dell is one of the largest tech companies and there is carry over fear," said David Katz, chief investment officer at Matrix Asset Advisors, suggesting that if Dell is having problems then rivals may be facing similar issues.

"The other real negative factor today was that oil has continued to defy any rationality and crosses US$67 a barrel and while it has not had a meaningful impact on the market yet, at these levels it definitely would," Katz said.

OIL HITS RECORD AGAIN

NYMEX crude oil futures ended well above US$66 a barrel on Friday after racing past US$67 to post an all-time record as petrol rallied to a new high following a rash of refinery shutdowns.

Crude for September delivery settled US$1.06 higher at US$66.86 a barrel.

Crude has hit fresh all-time highs everyday this week. The Reuters CRB commodity price index jumped to a 25-year high, boosted by surging crude prices.

High energy costs can squeeze companies' profits and dampen consumer spending but they boost shares of oil majors.

Exxon Mobil Corp rose 10 cents to US$61.05 and ConocoPhillips climbed 22 cents to US$66.62. The American Stock Exchange index of energy companies gained 0.25 per cent.

DELL WEIGHS, DATA DOESN'T HELP

Dell on Thursday blamed the lower revenue outlook on expectations of weakness in sales to the government and low-priced consumer PCs.

Among other tech stocks falling, chip maker Intel Corp. dropped nearly 2 per cent to US$26.31 and internet equipment maker Cisco Systems Inc fell 1.4 per cent to US$17.80.

Also weighing on stocks was data showing a worsening trade deficit, higher-than-expected import prices and a drop in consumer sentiment, fuelled by higher petrol prices.

MCDONALD'S DOWN, UNITED TECH UP

Meanwhile, shares of the fast-food restaurant chain McDonald's Corp. faded 4 per cent to US$33.25 on the New York Stock Exchange a day after hitting a four-and-a-half year high amid market talk that private equity firms may seek a stake in the chain.

But fellow Dow component United Technologies Corp. rose 0.3 per cent to US$51.78 after Banc of America raised its rating on the industrial and aerospace conglomerate to "buy" from "neutral."

On the NYSE, about 1.3 billion shares changed hands, below last year's daily average of 1.46 billion, while on Nasdaq, about 1.58 billion shares traded, below last year's daily average of 1.81 billion.

Decliners outpaced advancers by a ratio of about 2-to-1 on both the New York Stock Exchange and the Nasdaq.

- REUTERS