New York – U.S. stocks closed lower Friday, with the Nasdaq Composite Index skidding to its lowest finish in 14 months and taking its third straight weekly loss, undermined by a profit warning from Dell and nervousness about slowing economic growth.
The worries about the economy overshadowed growing optimism that the Federal Reserve will stop raising interest rates soon.
The Nasdaq recorded its third consecutive weekly loss after falling 19.03 points to 2,020.39, its weakest close since May 2005. For the session, the index lost almost 1 percent.
The Dow Jones industrial average fell 59.72 points to 10,868.38 but ended 1.2 percent higher on the week, while the S&P 500 Index dropped 8.84 points to 1,240.29. For the week, the S&P 500 posted a 0.3 percent increase.
“Dell’s profit warning is the ‘excuse du jour’ to sell,” said Mike Holland, chairman of Holland Balanced Fund. “It reminds people of the downside of what (Federal Reserve Chairman Ben) Bernanke said. The upside was that they may stop raising rates. The downside is that we have a moderating economy.”
In the wake of Bernanke’s congressional testimony earlier in the week and following on from Thursday’s release of the minutes of the last Federal Reserve meeting on interest rates, the federal-funds-futures market now sees an August increase in interest rates as unlikely.
Dell’s warning weighed heavily on the computer hardware sector.
Other technology sectors also reeled from Dell’s news, with the Philadelphia Semiconductor Index at a 14-month low. Networkers, airlines, biotechs and transportation stocks were other notable decliners.
Drug stocks was one of the few areas showing gains.
Volume was over 1.91 billion shares on the Big Board and more than 2.38 billion shares on the Nasdaq.
Crude-oil futures rose, extending Thursday’s gains amid signs that Israel was preparing for a ground invasion of southern Lebanon. Crude for September delivery closed up 16 cents at $74.43 a barrel but took a 5.4 percent loss for the week.
On the currency market, the dollar was particularly weak against the yen, with the latter helped by speculation – unfounded – that China would again revalue the yuan. Instead, China tightened reserve requirements for banks. Japan’s yen often serves as a proxy for the yuan, which can trade only in a narrow band. The dollar late in the day was off 0.7 percent at 116.18 yen.
The dollar also fell against the euro and the British pound. The euro was last up 0.5 percent at $1.2693, while the British pound was up 0.5 percent at $1.8577.
