Stocks fell sharply Thursday after an analyst downgrade on the chip sector and gains in the dollar.
The Dow Jones Industrial Average lost 93.87, or 0.9 percent, to close at 10,332.44. The S&P 500 fell 1.3 percent. The Nasdaq was the hardest hit of the three, down 1.7 percent.
Intel was the biggest drag on the Dow, down 4.1 percent, after Bank of America-Merrill Lynch slashed its 2010 growth forecast for the global chip industry and downgraded 10 chip makers, including Intel.
The Philadelphia Stock Exchange semiconductor index lost 3.4 percent.
The downgrade was the latest blow to investors betting on tech at this stage of the recovery. On Wednesday, the tech sector caught a one-two punch as engineering-software maker Autodesk delivered a weaker-than-expected outlook and customer-relations software maker Salesforce.com reported a slowdown in new business.
Alcoa and GE rounded out the Dow's bottom three today.
Commodity-related stocks took a hit as the dollar roseagainst both the yen and euro.
GE shares lost 2.1 percent after Vivendi said it wants to exit NBC Universal, the parent of CNBC, but isn't quite there yet.
"We are not interested in staying onboard a new GE-Comcast ownership of NBCU," said Vivendi CFO Philippe Capron. "[W]e will exit and it will give us more headroom."
As for that tie-up between Reckitt Benckiser and Colgate Palmolive , both companies say there is no truth to that speculation. Colgate shares dropped 1.7 percent.
JPMorgan Chase shares fell 1.9 percent after the company announced it is buying the half of European investment bank Cazenove that it doesn't own, in a deal valued at $3.4 billion.
At the same time, Keefe, Bruyette & Woods said JPMorgan is likely to increase its dividend in early 2010 due to its capital position and recent repayment of government bailout money.
Blackstone Group is reportedly about to acquire food makerBirds Eye for more than $1.3 billion. Birds Eye would become part of Blackstone's Pinnacle Brands unit, which owns such familiar brands as Duncan Hines and Swanson.
A couple of companies announced job cuts today:
Insurer Aetna is cutting 625 jobs, or about 1.8 percent of its workforce.
And Time Warner's AOL unit is expected to lay off about one-third of its workforce as the company is pushing aggressively to cut costs in preparation for its spinoff.
Reports indicated that AOL was asking about 2,500 workers to take voluntary layoffs in an effort to cut $300 million in annual operating costs.
The last remnants of earnings season trickled in, with Sears Holding providing an upside surprise due to the first positive performance from Kmart in several quarters.
Limited Brands beat analysts' earnings expectations and raised its outlook, helped by an improvement at its Bath & Body Works stores, but its Victoria's Secret brand disappointed.
Williams-Sonoma, beat by a wide margin and raised its full-year outlook but Dick's Sporting Goods reported sales declined.
The day's economic news was mixed.
Jobless claims were unchanged last week but the prior week was revised up by 3,000 claims. The four-week moving average, which smooths out weekly fluctuations, dropped to its lowest level in nearly a year.
"Claims remain high enough to signal further payroll declines, but they are heading in the right direction," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients. "[W]e are sticking to our view that employment will level off in the first half of next year, perhaps as soon as the end of the first quarter," he said.
Some disappointing news on the housing front: Mortgage delinquencies rose to 9.64 percentof all loans outstanding in the third quarter and foreclosures jumped to 4.47 percent for a total of 14.41 percent — another new record — the Mortgage Bankers Association reported.
At this point, the number of loans delinquent or in foreclosure are bigger than the number of new and existing homes for sale today.
Leading indicators rose 0.3 percentin October, slightly lower than expected, after a 1-percent jump in September. Still, it was the seventh-straight month the index has risen.
And the Philadephia Fed branch said its gauge of regional manufacturing activity rose to 16.7 in November from 11.5 in October, beating expectations.
Still to Come:
THURSDAY: Earnings from Dell, Gap after the bell
FRIDAY: Fed's Plosser speaks; state-by-state jobs report
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