Tech jumps on Dell optimism; broader market flat

NEW YORK (Reuters) - U.S. technology shares rose on Friday as strong results from computer maker Dell Inc (DELL.O) signaled that business and consumer spending was holding up, driving the Nasdaq to end the month up 4.6 percent.

Rising oil prices, however, spurred uneasiness, limiting Wall Street's gains, with the S&P 500 .SPX rising only slightly and the Dow Jones industrial average .DJI falling slightly.

Since oil prices hit a record above $135 barrel last week, investors remain concerned about the effect of soaring fuel costs on inflation and on consumer spending, a key driver of economic growth.

In addition, data on Friday showed that consumer confidence fell to a 28-year low in May.

Still, Dell shares jumped more than 5 percent, putting the stock among the Nasdaq composite index's top boosters, along with chip designer Marvell Technology Group Ltd (MRVL.O), up more than 23 percent, thanks to stronger-than-expected earnings.

The semiconductor index .SOXX, up 2.1 percent, notched its second straight monthly advance, capping its longest monthly winning streak since October 2006.

"The strength of Dell's numbers was a pleasant surprise," said Georges Yared, founder and chief investment officer at Yared Investment Research in Wayzata, Minnesota.

"What this demonstrates is that technology spending is very strong globally. It may not be as strong domestically, but U.S. weakness is being offset by global demand. So tech is probably positioned now for a very good second quarter."

The Dow Jones industrial average .DJI ended down 7.90 points, or 0.06 percent, at 12,638.32. The Standard & Poor's 500 Index .SPX finished up 2.12 points, or 0.15 percent, at 1,400.38. The Nasdaq Composite Index .IXIC closed up 14.34 points, or 0.57 percent, at 2,522.66.

For the week, the Dow ended up 1.3 percent, while the Nasdaq climbed 3.2 percent and the S&P 500 gained 1.8 percent.

The Nasdaq's 4.6 percent rise for the month of May marked its third straight monthly advance and was its second-strongest month this year. The Dow ended the month down 1.4 percent, while the S&P 500 rose 1.1 percent, registering its second straight monthly climb.

TECH LEADERSHIP

The strength in technology came a week after the tech sector overtook financials as a leading constituent of the S&P 500.

Dell shares finished at $23.06 on Nasdaq, while Marvell shares rose to $17.36. Contributing most to the Nasdaq's rise were shares of iPod and iPhone maker Apple Inc (AAPL.O), which closed up 1.1 percent at $188.75.

Shares of Cisco Systems Inc (CSCO.O), whose routers and other networking gear form a backbone of corporate networks, were the top tech contributor to the S&P 500's rise, up 2 percent at $26.72 on Nasdaq.

Computer maker Hewlett-Packard Co (HPQ.N) led the Dow's tech components with a gain of 0.3 percent to $47.06 on the New York Stock Exchange.

Shares of American International Group Inc (AIG.N) , the world's largest insurer, were another Dow standout, finishing up 1.9 percent at $36.00 on the NYSE after Morgan Stanley said the recent decline in its stock was overdone and raised its rating.

AIG's gain bucked a downward trend across the financial sector as investors locked in profits after Thursday's strong advance.

Shares of Bank of America Corp (BAC.N), the No. 2 U.S. bank, ended down 1.7 percent at $34.01 on the NYSE. Shares of JPMorgan Chase & Co (JPM.N), the No. 3 U.S. bank, declined 1.3 percent to $43.00, also on the NYSE.

Energy shares also fell on profit taking, with Exxon Mobil Corp (XOM.N) ending down 0.7 percent at $88.76 on the NYSE.

COSTCO DROPS, COCA-COLA LOSES FIZZ

Shares of consumer-oriented companies like retailers also featured among the day's top drags, with shares of Costco Wholesale Corp (COST.O), the leading U.S. warehouse club operator, down more than 2 percent at $71.32 after Piper Jaffray cut its rating on the stock.

Shares of Coca-Cola Co (KO.N), the world's largest soft-drink company, declined 1.1 percent to $57.26 on the NYSE, making the stock the Dow's biggest weight, while rival PepsiCo Inc (PEP.N) slipped 0.8 percent to $68.30.

U.S. crude oil CLc1 gained 73 cents, or 0.6 percent, to settle at $127.35 a barrel on the New York Mercantile Exchange.

In economic news, the core personal consumption expenditures price index -- the Federal Reserve's preferred measure of inflation -- moderated in April from the previous month, easing inflation fears.

But a Reuters/University of Michigan gauge of consumer confidence fell to a 28-year low in May, keeping stock gains in check. A separate report showed business activity in the U.S. Midwest contracted for May for the fourth consecutive month, but the rate of downturn moderated.

Friday's volume was tepid, as it has been throughout the week.

"The whole week really hasn't been a great volume week. It's almost like a lot of people made this past Memorial Day a five-day holiday instead of one day," said Victor Pugliese, director of listed equity trading at Broadpoint Securities in San Francisco.

About 1.41 billion shares changed hands on the New York Stock Exchange, below last year's estimated daily average of roughly 1.90 billion, while on Nasdaq about 2.20 billion shares traded, above last year's daily average of 2.17 billion.

Advancing stocks outnumbered declining ones by a ratio of about 5 to 4 on the NYSE and by 6 to 5 on Nasdaq.

(Editing by Leslie Adler)