Tech stocks set to fall after Dell news

NEW YORK (Reuters) - U.S. technology stocks were set to fall on Tuesday after bellwether Dell Inc. cut its revenue forecast a day earlier and the Federal Reserve was expected to raise interest rates for a 12th consecutive time.

Shares of Dell, the world's largest personal computer maker, fell 4.6 percent to $30.41 on the Inet electronic brokerage system. Dell on Monday posted preliminary third-quarter earnings below expectations and lowered its revenue forecast. UBS cut its rating on Dell to "neutral" from "buy," MarketWatch reported on its Web site.

"Today will be a test of the market to see how it handles some negative news in the tech sector, Dell being that test," Barry Hyman, equity market strategist with Ehrenkrantz, King, Nussbaum, said.

Nasdaq 100 futures were down 5.5 points. S&P 500 futures were down 2 points, below their fair value, a mathematical formula that evaluates their pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures were up 35 points.

Also weighing on investors' minds was the Fed meeting, which is expected to result in a quarter-point increase in the benchmark fed funds rate to 4 percent. An announcement is expected about 2:15 p.m.

Even more than the rate announcement, investors will watch for clues in the Fed's policy statement on how long it expects to continue raising rates.

"Trading is going to be dominated by waiting for the Federal Reserve Board," said Hyman. "We still expect the Fed to go a quarter of a percentage point, and no change in language."

Shares of Procter & Gamble Co. could help support the Dow average. Its stock rose 1.1 percent to $56.61 on Inet after the maker of Crest toothpaste and Tide laundry detergent posted a 4 percent rise in quarterly profit.

Shares of Nabi Biopharmaceuticals dropped 67 percent to $4.25 on Inet after it said its experimental vaccine against staphylococcus aureus bacteria failed in a late-stage trial.

In takeover news, defense contractor Lockheed Martin Corp. and three private equity firms are considering a bid for Computer Sciences Corp. , a technical services provider, according to a report in the Wall Street Journal. Shares of Computer Sciences were up 15.1 percent at $59 on Inet.

Shares of Sirius Satellite Radio Inc gained 2.5 percent to $6.38 after the satellite radio company posted an increase in subscribers for its fee-based radio service.

The Institute for Supply Management is scheduled to release its October manufacturing index at 10 a.m. Economists in a Reuters survey expect a median reading of 57.0 versus 59.4 in September.

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