Cisco Sinks Big-Cap Techs
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Cisco's cautious outlook sent the Nasdaq's biggest names to steep losses on Thursday.
Cisco's quarterly earnings and revenues beat Wall Street estimates, but the company's forward guidance was slightly below forecasts, and its comments that critical industries like financial, automotive and retail were pulling back on IT spending raised fears that the subprime mortgage market crisis could spread to the tech sector, until now one of the strongest in the stock market.
Cisco fell 9.5% on the news, closing at $29.63. At its low for the day, the Nasdaq was down 100 points, or nearly 4%, before recovering to close off 1.9%. The Dow and S&P pared steep losses to end the day modestly lower after beaten-down financials led the rebound.
Federal Reserve Chairman Ben Bernanke didn't help matters any when he told Congress that economic growth may slow while inflation pressures persist, but Fed funds futures traders began to price in another rate cut for the Fed's December meeting anyway.
Vonage was a rare winner, up 13% after settling its patent dispute with AT&T. WebMD parent HLTH jumped 12% on its results and an upgrade.
Amkor fell 13% on a sales decline and weak outlook.
The Nasdaq lost 52 to 2696, the S&P slipped 1 to 1474, and the Dow fell 33 to 13,266. Volume rose to 5.4 billion shares on the NYSE, and 3.51 billion on the Nasdaq. Decliners led by a 17-16 margin on the NYSE, and 16-14 on the Nasdaq. Downside volume was 51% on the NYSE, and 79% on the Nasdaq. New highs-new lows were 78-489 on the NYSE, and 80-445 on the Nasdaq.