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http://story.news.yahoo.com/news?tmpl=story2&cid=568&ncid=749&e=1&u=/nm/20021107/bs_nm/markets_stocks_dchttp://story.news.yahoo.com/news?tmpl=story2&cid=568&ncid=749&e=1&u=/nm/20021107/bs_nm/markets_stocks_dc
Stocks Sink, Hurt by Cisco Outlook
46 minutes ago
By Denise Duclaux
NEW YORK (Reuters) - Stocks tumbled at midday on Thursday, dragging major market gauges down more than 2 percent, as a weak sales outlook from technology bellwether Cisco Systems Inc. (NasdaqNM:CSCO - news) stirred doubts over the month-long rally on Wall Street.
"Cisco talking about weak information spending was the piece of news we didn't want to hear the most," said Arthur Hogan, chief market analyst at Jefferies & Co. "Bear in mind too that we have been on a pretty good run for the last four weeks without taking much of a pause."
Web gear giant Cisco lost more than 5 percent after warning of tepid quarterly sales. Cisco's weak forecast lands after a slew of better-than-expected earnings reports lifted stocks for four weeks in a row. Wall Street's sentiment has taken a turn for the better, but concerns linger over the corporate outlook as well as the pace of the economic recovery.
"People were hoping that going forward Cisco would give better guidance," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank Private Banking, which oversees $7 billion. "People are concerned that we are not around that corner as of yet."
The technology-loaded Nasdaq Composite index (^IXIC - news) skidded 39 points, or 2.75 percent, to 1,379. The blue-chip Dow Jones industrial average (^DJI - news) fell 186 points, or 2.13 percent, to 8,584. The broad Standard & Poor's 500 (^SPX - news) dropped 21 points, or 2.36 percent, to 901.
Declining stocks trounced advancers by a ratio of about 7 to 3 on the Big Board and the Nasdaq. More than 696 million shares changed hands on the Big Board and more than 926 million on Nasdaq in active trading.
Stocks rose a day ago after the Federal Reserve (news - web sites) surprised investors with a half-percentage point cut in interest rates and a sweeping Republican victory in Congress fanned hopes of a business-friendly administration. Wednesday's advance in the market landed the Nasdaq its sixth straight day of gains.
President Bush (news - web sites) will hold a news conference at 2:00 p.m. EST (1900 GMT), marking his first public appearance since Republicans captured the Senate and strengthened their hold on the House of Representatives in Tuesday's mid-term elections.
He is likely to face questions on how he will use his increased power to advance an agenda that includes further tax cuts, health care legislation, energy policy changes, and pressure on Iraq to disarm.
Cisco, the No. 1 maker of gear that directs Internet traffic, fell 70 cents to $12.26 and ranked as the most active on the Nasdaq. The company posted a net profit from a year-ago loss, but said revenue in its second quarter would be flat to down as much as 4 percent from its first quarter as customers cut spending.
The cautious outlook whacked other technology heavyweights. Chip leader Intel Corp. (NasdaqNM:INTC - news) lost 80 cents, or more than 4 percent, to $18.35. Software giant Microsoft Corp. (NasdaqNM:MSFT - news) fell $1.33, or 2 percent, to $55.70. Computer maker International Business Machines Corp. (NYSE:IBM - news) lost $2.83, or more than 3 percent, to $78.71.
J.P. Morgan Chase & Co. Inc. (NYSE:JPM - news) fell $1.55, or more than 7 percent, to $20.51. The financial giant ranked as the most active on the Big Board and led the blue-chip Dow lower.
The No. 2 U.S. banking company said rumors it had suffered large losses on gold trades were "false and irresponsible." Its stock dropped on rumors arising in Europe that it had lost between $17 billion and $70 billion on gold trades.
Yahoo Inc. (NasdaqNM:YHOO - news) tumbled $1.93, or more than 11 percent, to $15.45. Japanese Internet investor and access provider Softbank Corp. (news - web sites) cut its stake in Yahoo by selling 17.5 million shares. Prudential Securities also downgraded the Internet giant to "hold" from "buy" based on its valuation.
TMP Worldwide (NasdaqNM:TMPW - news), the parent company of online job site Monster.com, tanked $3.47, or more than 22 percent, to $12.29. The company said its third-quarter earnings fell by close to half due to the persistent slump in the labor market, and warned of a similarly dismal fourth quarter.
Michaels Stores Inc. (NYSE:MIK - news), the largest U.S. arts and crafts retailer, tumbled $10.78, or nearly 25 percent, to $33.90. The company said it expects third-quarter profit to hit the low end of Wall Street's estimates and slowing sales growth forced it to cut its full-year earnings forecasts.
Gap Inc. (NYSE:GPS - news) rose 34 cents, or more than 2 percent, to $13.11. The retailer said October sales at stores open at least a year rose 11 percent, halting a 29-month slide in same-store sales, and raised its third-quarter earnings forecast.
A government report before the open showed little, if any, improvement in the labor market. Fewer Americans applied for unemployment benefits last week, according to the data, but a closely watched average of these claims rose.
A separate government report showed U.S. productivity picked up in the third quarter, and workers saw the largest hourly compensation gain in two years. (With additional reporting by Doris Frankel)
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