Stocks fell Monday as investors took profits after last week’s extraordinary gains. Financial stocks led the way lower on downgrades, while technology investors contemplated the latest in the Microsoft-Yahoo-Google triangle and awaited quarterly results from Cisco.
Google shares lost 4%, falling back below $500 for the first time in six months, after the company and Microsoft traded barbs over Microsoft’s hostile takeover bid for Yahoo. Google also continued to be weighed down by quarterly results last week that missed Wall Street estimates.
Yahoo’s shares, meanwhile, gained 3.4% on reports that the company could consider a partnership with Google — among other options — and that company officials believe Microsoft’s offer undervalues the company. And Real Networks was up 4% on a music deal with Yahoo.
Besides the continued courtship of Yahoo, the other big news for the tech sector this week will be Cisco’s quarterly results, which are due out after the close on Wednesday. Investors are desperate for signs that IT spending is surviving the economic downturn, and they’re hoping Cisco will provide evidence of that.
Analysts are expecting Cisco to report a 16% sales gain to $9.8 billion and earnings of 38 cents a share, according to Thomson Financial. But judging from Monday’s trading action, with Cisco’s shares lower by 4.5%, traders have some doubt about the company’s ability to meet those forecasts, a sharp contrast after the company routinely topped expectations in recent years. Of particular concern will be the health of the U.S. corporate sector, which was the one major weak spot in Cisco’s November earnings report.
SigmaTel was the biggest gainer on U.S exchanges Monday, soaring 64% on a takeover offer from Freescale Semi.
Palm rose on a JP Morgan upgrade, while Broadcom fell on a downgrade by the firm.
The Nasdaq lost 30 to 2382, the S&P fell 14 to 1380, and the Dow lost 106 to 12,635. Volume fell to 3.48 billion shares on the NYSE, and 2.13 billion on the Nasdaq. Decliners led by a 19-13 margin on the NYSE, and 16-12 on the Nasdaq. Downside volume was 69% on the NYSE, and 68% on the Nasdaq. New highs-new lows were 46-54 on the NYSE, and 54-70 on the Nasdaq.
