(RTTNews) - As investors digest a downbeat government report which showed that personal income fell by much more than expected in July, stocks continue to see substantial weakness in early afternoon trading on Friday. Disappointing quarterly results from Dell are also contributing to the selling pressure on the Nasdaq.

Earlier in the day, the Department of Commerce released its report on personal income and spending in the month of July, showing that personal income decreased by much more than expected while personal spending showed a modest increase.

The report showed that personal income fell 0.7 percent in July following a 0.1 percent increase in June and a 1.8 percent increase in May. Economists had been expecting a much more modest decrease of about 0.2 percent.

At the same time, the Commerce Department said that personal spending edged up 0.2 percent in July compared to a 0.6 percent increase in the previous month. The modest increase in personal spending came in line with economist estimates.

In other economic news, the results of the National Association of Purchasing Management-Chicago’s business survey for August are scheduled to be released soon after the markets open. Economists expect the business barometer index based on the survey to come in at 50.

Meanwhile, the tech-heavy Nasdaq is showing considerable weakness after Dell released its second quarter earnings, which showed a decline of 17 percent from last year, coming in below analysts’ expectations. At the same time, the company warned that the slowdown in IT spending has extended into Western Europe and several countries in Asia.

Following the quarterly results, analysts at Cowen are maintaining their Outperform rating, as they “believe the turnaround effort is intact.” The analysts stated that the 11 percent revenue growth is evidence of that.

The major average have seen additional selling pressure, setting new intraday lows in recent trading, although they have moved off of those lows in the past few minutes. The Dow is currently down 159.99 at 11,555.19, the Nasdaq is down 48.22 at 2,363.42 and the S&P 500 is down 15.25 at 1,285.43.

Sector News

Semiconductor stocks are turning in some of the worst performances, hurt by a sharp drop in Marvell Technology after the company released its second quarter results. The Philadelphia Semiconductor Index is down 3 percent, reversing the gains posted in the previous two sessions. Earlier in the day, the index set a three week intraday low.

Computer hardware stocks are sharply lower as well, with the Amex Computer Hardware Index falling 3.3 percent. The weakness in the computer hardware sector comes after Dell reported disappointing second quarter results.

Reversing the gain posted in the previous session, networking stocks are also showing notable weakness. The Amex Networking Index is down 2.5 percent. Adaptec (ADPT) is among the worst performers in the sector, down 3.5 percent. On Thursday, the maker of hard drive controllers announced that it has agreed to buy Aristos Logic Corp. for $41 million in cash.

Meanwhile, Oracle (ORCL) is contributing to weakness in the software sector. The Amex Software Index is falling 2.2 percent, reversing most of the gains posted in the previous two sessions. Shares of Oracle are down 3.8 percent, after setting a three week intraday low. On Wednesday, the company announced that it hired Jeff Epstein as its new chief financial officer.

Other stocks that are seeing declines include wireless, internet and utility stocks. The Amex Wireless Index is down 2.4 percent, the Amex Internet Index is down 2.2 percent and the Philadelphia Utility Index is down 1.4 percent.

On the other hand, railroad and health insurance stocks are seeing slight gains. The Dow Jones US Railroad Index is up 0.4 percent, while the Morgan Stanley Healthcare Payor Index is up 0.1 percent.

Stocks In The News

Among individual stocks, Marvell Technology is showing considerable weakness following the release of its second quarter results. After the markets closed on Thursday, Marvell said it swung to a profit in its second quarter, although its third quarter revenue guidance fell short of analysts expectations.

Shares of the chip maker are falling 4.7 percent, extending a recent trend lower. Earlier, the stock set a three month intraday low.

Magma Design Automation (LAVA) is also seeing significant selling pressure after the company said it expects wider loss in its first quarter, citing account delays in customer purchasing decisions as well as channel transition. In addition, the company lowered its revenue as well non-GAAP results for the first quarter. The stock is currently down 8.8 percent, after setting a multi-year intraday low earlier in the session.

On the other hand, LDK Solar (LDK) is posting a considerable gain after the company signed a seven-year contract with Hyundai Heavy Industries. As per the terms of the agreement, LDK Solar will deliver approximately 440 MW of multicrystalline silicon solar wafers to Hyundai Heavy Industries over a seven-year period. LDK Solar is currently up 1.8 percent, setting an eight month intraday high.

Other Markets

Stock markets across the Asia-Pacific region closed higher on Friday after a bigger-than-expected upward revision to second quarter U.S. GDP data along with a drop in crude oil prices overnight lifted investor sentiment. The Indian market surged 3.7 percent and the Japanese market gained 2.4 percent, its biggest one-day gain in three weeks.

The major European markets ended the day higher on Friday. The French CAC 40 Index and the German DAX Index rose 0.5 percent and 0.03 percent, respectively, while the U.K.’s FTSE 100 Index closed up 0.6 percent.

Meanwhile, treasuries have moved back to the downside in afternoon trading although the benchmark ten-year note is well off of its worst level of the day. Subsequently, the yield on the ten-year note is currently up 3 basis points at 3.825 percent.

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Posted in Categories: Economy, Eurozone, Japan, Releases, USA.

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