* Dell, Marvell outlooks pressure tech sector
* Oil up on Tropical Storm Gustav concerns
* Nasdaq down 1.6 pct; Dow off 1.1 pct; S&P down 0.9 pct
(Updates with oil turning flat)
By Steven C. Johnson
NEW YORK, Aug 29 (Reuters) - U.S. stocks tumbled on Friday
after a warning by computer maker Dell that companies worldwide
are cutting back on technology spending spooked the tech
sector.
Economic data added to market jitters heading into the long
Labor Day weekend. A government report before the opening bell
showed U.S. personal income fell unexpectedly in July while
spending slowed as the effects of a government stimulus package
wore off. An inflation measure hit a 17-year high.
Dell Inc's <DELL.O> comments about technology spending
sparked fears of weakness in the whole tech sector, as did the
company's surprisingly steep fall in quarterly profit.
Shares of Dell, the world's second-largest computer maker,
fell 13 percent, and other tech shares such as International
Business Machines Corp <IBM.N> also declined.
Chipmakers were under pressure after diversified U.S.
chipmaker Marvell Technology Group Ltd <MRVL.O> gave a
conservative outlook for the third quarter, sending its shares
down nearly 4 percent.
"The market is just very fragile. There's not a lot of
support going into the Labor Day weekend," said Gary Wolfer,
senior portfolio manager at Univest Wealth Management & Trust
in Souderton, Pennsylvania. "The Dell news has compounded the
downside move. When you have a non-financial company missing
its earnings, that's disconcerting to the market."
The Dow Jones industrial average <> was down 124.49
points, or 1.06 percent, at 11,590.69. The Standard & Poor's
500 Index <.SPX> was down 12.04 points, or 0.93 percent, at
1,288.64. The Nasdaq Composite Index <> was down 38.73
points, or 1.61 percent, at 2,372.91.
The U.S. bond market was set to close early on Friday ahead
of the Labor Day holiday, and investors said stock trading
volume was likely to thin further in the afternoon.
Stocks pared some losses in midafternoon after the price of
oil eased to $116.16 per barrel, still up 0.5 percent but off
an earlier high above $118.
But investors remained nervous about Tropical Storm Gustav
and its possible impact on U.S. offshore oil and gas
installations in the Gulf of Mexico.
Shares of Marvell Technology Group, whose chips are used in
Apple's <AAPL.O> iPhone and Research In Motion Ltd's <RIM.TO>
BlackBerry, fell 5 percent to $14.02. The company said it is
still unsure of the impact of a weakening U.S. economy.
An index of semiconductor stocks <.SOXX> fell 3 percent,
while an index of retail stocks <.RLX> dropped 0.5 percent.
Dell shares fell 13.1 percent to $21.91. IBM shares dropped
2.2 percent to $121.83.
There were some bright spots among the economic data,
however. Business activity in the U.S. Midwest expanded
strongly in August as new orders jumped, the Institute for
Supply Management-Chicago business barometer showed, even as
the rate of hiring plummeted to a four-month low.
The Reuters/University of Michigan report on consumer
sentiment, meanwhile, showed confidence recovered somewhat from
depressed levels, helped by moderating gasoline prices.
(Additional reporting by Kristina Cooke and Herb Lash; Editing
by Leslie Adler)
