Updated from 4:08 p.m. EDT

Dell's ( DELL) earnings warning Friday sent tech shares and the broader market to a second day of declines.

The Dow Jones Industrial Average closed with a loss of 59.72 points, or 0.55%, to 10,868.38, and the S&P 500 fell 8.84 points, or 0.71%, to 1240.29. The tech-heavy Nasdaq Composite was the weakest performer, falling 19.03 points, or 0.93%, to end the week at 2020.39. The Nasdaq has now dropped 350 points, or 14.7%, from its closing high for 2006 in mid-April.

Despite the losses, the Dow finished the week with a gain of 129 points, or 1.2%. The S&P 500 was higher by 0.3%, but the Nasdaq ended down 0.8% for the past five sessions.

"With all the volatility this week, we saw a flight from economically sensitive stocks into more defensive securities," said Michael Sheldon, chief market strategist with Spencer Clarke. "The volatility was everywhere, whether you look at stock prices, commodities or interest rates. While earnings have, on the whole, been in line or better than expected, the outlook for future growth is what has investors worried."

Volume was heavier for the options expiration session. About 1.92 billion shares changed hands on the New York Stock Exchange, with decliners outpacing advancers by a 2-to-1 margin. Volume on the Nasdaq was 2.39 billion shares, and three stocks fell for every one that rose.

Indices finished lower after Dell cut its second-quarter profit forecast, citing aggressive pricing in a slowing commercial market. Dell sees second-quarter net of 21 cents to 23 cents a share on sales of $14 billion. Analysts had been expecting a net of 32 cents a share on sales $14.23 billion. The stock fell $2.19, or 9.9%, to $19.92 after touching a multiyear low of $18.95 during trading.

"Now that we're past Fed Chairman Ben Bernanke's testimony, reality has set back in," said James Park, managing director with Rodman & Renshaw. "Dell's revised outlook has coupled with more attacks in the Middle East and will give us a cautious tape heading into the weekend. People are selling the news, especially since they don't know what will happen over the weekend."

Dell's glum outlook squelched optimism about better earnings at Microsoft ( MSFT) and several other tech giants.

Microsoft rose 4.5% after reporting better-than-expected fourth-quarter earnings and setting $40 billion worth of share repurchases over the next five years. Profit fell 24% from a year ago because of the cost of new investments, but adjusted earnings of 31 cents a share were a penny ahead of estimates. Shares ended with a gain of $1.02 at $23.87.

Google ( GOOG) shares climbed 0.8% after the company reported a $721 million profit in its second quarter and said earnings before various costs were $2.49 a share, beating estimates by 27 cents. Net sales of $1.67 billion also beat estimates. Google was higher by $2.99 to $390.11.

Amgen ( AMGN) topped quarterly earnings forecasts when an acquisition-related charge was backed out. It earned $1.01 a share on sales of $3.6 billion in the June quarter. Analysts wanted 94 cents and $3.5 billion. Amgen was higher by $2.23, or 3.5%, to $66.15.

To view Gregg Greenberg's video take on today's market, click here .

"We've seen several of these one-day wonders with no follow-through," said Marc Pado, U.S. market strategist with Cantor Fitzgerald, referring to Wednesday's market rally. "Declines seem to come on a string of days. This is indicative of a downtrend, which we've been in for several months. We remain extremely oversold."

Oil prices rose as Israel reportedly prepared to step up its ground offensive in southern Lebanon and the death toll in recent fighting climbed above 300. Televised footage showed that Israeli ground troops and tanks are gathering at the border with Lebanon.

The newly benchmarked September crude contract closed up 16 cents to $74.43 a barrel. Gold fell $12.30 to $620.20 an ounce, finishing the week down 7.2%. The 10-year Treasury bond was down 3/32 in price to yield 5.04%, and the dollar fell against the yen and euro.

Despite oil's advance, the Philadelphia Oil Service Sector Index finished lower by 2.8%. Elsewhere, the Philadelphia Semiconductor Sector Index gave back 4.8%, the Philadelphia Housing Sector Index was off 0.8%, and the S&P Retail Index ended down 1.2%.

In other earnings, Advanced Micro Devices ( AMD) slumped 15.7% after the chipmaker's second-quarter results missed estimates. AMD posted earnings of $89 million, or 18 cents a share, on revenue of $1.22 billion, both below the Thomson First Call estimate for EPS of 22 cents on revenue of $1.25 billion. AMD lost $3.39 to $18.26.

Embattled Broadcom ( BRCM) fell 12.3% after the communications-chip maker delayed releasing its profit figures for the second quarter because of a review of its stock-options policies. The company did report second-quarter sales of $941.1 million, compared with analysts' forecast of $941.8 million. Broadcom was lower by $3.24 to close at $23.11.

Dow component Caterpillar ( CAT) posted a second-quarter profit of $1.05 billion, or $1.52 a share, up from $760 million, or $1.08 a share, a year earlier. Revenue jumped 13% to $10.61 billion from a year ago. Analysts expected earnings of $1.42 a share on revenue of $9.96 billion, according to Thomson First Call. Caterpillar was off 73 cents, or 1.1%, to $68.35.

Drugmaker Eli Lilly ( LLY) swung to a second-quarter profit of $822 million, or 76 cents a share, compared with a loss of $252 million, or 23 cents a share, last year. Results beat the Thomson First Call average estimate by a penny. Sales rose to $3.87 billion from $3.67 billion in the same quarter a year ago, in line with estimates. Shares slid $1.61, or 2.9%, to $54.65.

Halliburton ( HAL) posted second-quarter earnings of $591 million, or 55 cents a share, an increase of 51% from a year ago. Excluding items, the company earned 48 cents a share, a penny below the Thomson First Call average estimate. Halliburton dropped $2.64, or 8.1%, to $30.04.

On Monday, the earnings parade will continue with reports expected from Texas Instruments ( TXN), American Express ( AXP), BellSouth ( BLS), Merck ( MRK) and SanDisk ( SNDK).

Overseas markets were lower. In Europe, London's FTSE 100 slid 0.9% to 5720, and Germany's Xetra DAX lost 1.7% to 5451. In Asia, Japan's Nikkei fell 0.8% overnight to 14,821, and Hong Kong's Hang Seng slipped 0.1% to 16,464.