Cisco Leads Tech Shares Lower
Technology shares led Nasdaq lower Wednesday as some investors expressed disappointment over Cisco Systems’ earnings report issued Tuesday.
Blue chips fared better, though an upbeat earnings outlook from General Electric didn’t elicit the reaction some analysts had hoped.
In the bond market yields fell, while in commodities trading gold prices rebounded.
The stock market overall remained mired in a narrow trading range as investors await the Federal Reserve’s meeting Tuesday, when the central bank again is expected to cut its key short-term interest rate.
The Nasdaq composite index slid 42.14 points, or 1.9%, to 2,156.63, paced by Cisco’s 6.1% decline.
The Dow Jones industrials eased 16.53 points, or 0.2%, to 10,866.98, while the Standard & Poor’s 500 was off 0.5%.
Losers topped winners 21 to 17 on Nasdaq, but winners had a modest edge on the New York Stock Exchange. Trading was moderate.
“The fundamental outlook remains murky; the outlook for second-quarter earnings remains murky. The cup’s half full because the market’s holding, but those who say the cup’s half empty wonder what’s going to drive the market higher?” said Larry Wachtel, analyst at Prudential Securities. “You have a stalemate here.”
The market’s bulls say the virtual certainty of another Fed rate cut, and possibly more cuts after the upcoming one, will keep stocks from falling back to their lows of late March and early April.
Fourteen of 25 primary Treasury bond dealers polled by Bloomberg News said the Fed will push its key rate to 3.5% by later this year, after an expected half-point cut to 4% on Tuesday.
Still, Cisco’s earnings report weighed on the tech sector Wednesday.
The computer networking giant Tuesday reported operating earnings slightly ahead of reduced expectations. But the company failed to indicate if and when a turnaround in sales might occur.
Many were looking to the tech bellwether for indications that business is improving.
Cisco shares fell $1.25 to $19.13.
Among blue chips, Alcoa gained $1.04 to $41.38 and Procter & Gamble rose $1.69 to $66.19. But GE eased 5 cents to $49.43 even though its president was optimistic about earnings this year, despite the economy’s weakness.
In the bond market, yields were broadly lower as investors digested a record $11.9-billion corporate bond offering from WorldCom and a $3-billion deal from Verizon Communications.
With the offerings out of the way, buyers returned to the Treasury market. The yield on the five-year T-note slid to 4.65%, from 4.75% on Tuesday.
In commodities trading, near-term gold futures jumped $4.90 to $270 an ounce in New York. But traders said the metal’s advance was largely technical in nature and not based on inflation concerns.
Among Wednesday’s highlights:
* Tech shares falling with Cisco included Intel, down $1.55 to $29.93; Microsoft, down $1.66 to $70.40; and Juniper Networks, down $1.53 to $57.37.
Intel wasn’t helped by news that Microsoft is waiting until October to roll out its latest version of the Windows operating system, Windows XP--after the back-to-school buying season.
But National Semiconductor ended the session unchanged at $25, despite reducing quarterly earnings estimates and announcing 1,100 job cuts.
* Many financial stocks remained under pressure. Citigroup fell 35 cents to $49.45, and Wells Fargo lost 48 cents to $46. But Golden West Financial jumped $2.45 to $60.88.
* Gold stocks gained with bullion’s rise. Barrick Gold jumped 91 cents to $17.42, Newmont Mining surged $1.96 to $20.73 and Placer Dome rose 65 cents to $11.03.
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Market Roundup: C8-9
