Blue Chips Lose Impetus, Dell Lifts Techs

Fri Aug 13, 2004
By Megan Davies

NEW YORK (Reuters) - U.S. blue chips lost momentum on Friday as oil surged past $46 a barrel, although an upbeat outlook from computer maker Dell Inc. (DELL.O: Quote, Profile, Research) helped keep the technology-laced Nasdaq in positive territory.

Dell, the world's largest PC producer, jumped 5 percent a day after it gave a better-than-expected third-quarter outlook.

But countering this was another peak in the price of oil. U.S. crude has hit new highs for 10 out of the last 11 sessions. A fire at an Indiana refinery and worries over supply disruptions in Iraq and Venezuela were behind Friday's leap, sending NYMEX September crude (CLU4: Quote, Profile, Research) up 75 cents to $46.25 a barrel. Increased crude puts a damper on stock prices as investors worry about the impact on consumers' wallets and companies' profit margins. A hike in the price on Thursday sent U.S. stocks to new lows for the year.

"Dell is trying to save the day here," said Peter Boockvar, equity strategist at Miller Tabak & Co. "Unless you see a pull-back in oil it's going to be hard to sustain any rally. This market has turned into a bear and rallies will be modest while the path of least resistance is lower."

As the day wore on, early momentum fizzled out and by early afternoon the Dow was little changed.

The Dow Jones industrial average was up 5 points, or 0.05 percent, at 9,820. The Standard & Poor's 500 Index was up 1.5 points, or 0.14 percent, at 1,065. The technology-laced Nasdaq Composite Index was up 5 points, or 0.3 percent, at 1,758.

But gains from energy stocks such as Exxon Mobil Corp. (XOM.N: Quote, Profile, Research) and ChevronTexaco Corp. (CVX.N: Quote, Profile, Research) helped limit the downside. Exxon rose 42 cents to $44.98, ChevronTexaco gained $1.14 to $95.51 and ConocoPhillips (COP.N: Quote, Profile, Research) rose $1.28 to $73.85.

On the economic front, data showed the U.S. trade deficit widened much more than expected in June, hitting a record $55.8 billion dollars, the government said.

Meanwhile, U.S. consumer confidence deteriorated in early August, reversing July's increases, as expectations for the economy worsened, according to a survey from the University of Michigan.

Dell was the star of the tech sector with its upbeat report, in contrast to several gloomy forecasts by other bellwether tech companies this week.

It rose $1.58, or 4.8 percent, to $34.70. Smith Barney upgraded the stock to "buy" from "hold" on Thursday.

Electronics and testing equipment maker Agilent Technologies Inc. (A.N: Quote, Profile, Research) rose a day after it posted a quarterly profit versus a year earlier loss. Its stock was up 52 cents, or 2.64 percent, to $20.20.

But some tech stocks faced selling, such as Analog Devices Inc. (ADI.N: Quote, Profile, Research) , which makes chips used in cell phones and said revenue growth was slower than it expected. Analog Devices fell $1.29, or 3.81 percent, to $32.54.

Cisco was higher after Morgan Stanley upgraded the stock to "overweight" from "equal weight." Cisco was up 15 cents, or 1.15 percent, to $17.94.

But Hewlett-Packard Co. (HPQ.N: Quote, Profile, Research) fell a day after it posted quarterly earnings well below forecasts. Shares were down 51 cents at $16.44 on Friday.

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