Downbeat Dell Weighs on World Markets

A stock broker explains customers, not in the picture, how to read stock chart to buy stock at a...

A stock broker explains customers, not in the picture, how to read stock chart to buy stock at a securities company booth at Money Fair International Exposition Friday, Nov. 20, 2009 in Shanghai, China. Chinese shares ended mixed Friday after a five-day rally on electricity price increases, but finished the week up 3.8 percent. The benchmark Shanghai Composite Index shed 12.27 points, or 0.4 percent, to close at 3,308.35. (AP Photo/Eugene Hoshiko)

(AP)

World stock markets fell Friday amid mounting concerns about the pace of the U.S. economic recovery following a disappointing earnings update from computer maker Dell Inc.

After being higher earlier in the day, the FTSE 100 index of leading British shares closed down 16.29 points, or 0.3 percent, at 5,251.41, while Germany's DAX fell 39.03 points, or 0.7 percent, to 5,663.15. The CAC-40 in France was 30.12 points, or 0.8 percent, lower at 3,730.10.

On Wall Street, the Dow Jones industrial average was down 57.81 points, or 0.6 percent, at 10,274.63 around midday New York time while the broader Standard & Poor's 500 index fell 7.58 points, or 0.7 percent, lower at 1,087.32.

On Thursday, the two main U.S. indexes slid around 1 percent amid mounting concerns about the U.S. economic recovery and an analyst's downgrade of the chip industry.

Technology stocks were at the forefront of Friday's decline, too, after Dell reported a 54 percent drop in net income and a 15 percent decline in revenue in its latest quarter. Both declines were bigger than anticipated and Dell shares were down almost 10 percent.

Investors have also become a bit anxious over the failure of the S&P 500 to sustain its break above 1,100 points. Earlier this week, it managed to close above 1,100 for the first time in over a year but its retreat since then is stoking market talk that the rally since March has dried up ahead of the year end.

Neil Mackinnon, global macro strategist at VTB Capital, warned that there are a number of factors pointing to an imminent correction in stock markets — as well as the fall back of the S&P 500, he noted that the Nikkei is down 10 percent from it's highs and central banks in Asia are taking measures to discourage "hot money" inflows to stem the appreciation of their currencies against the dollar.

"Look for a correction soon with equity markets testing the October lows," said Mackinnon.