Dow Sheds Over 100, Led by Cisco
Stocks ended lower, as comments from CEO John Chambers sucked the wind out of the tech rally's sails.
The Dow Jones Industrial Average fell 113.96, or 1.1 percent, to close at 10,782.
The S&P 500 lost just under 1.2 percent, while the tech-heavy Nasdaq skidded 1.3 percent. The CBOE volatility index, widely considered the best gauge of fear in the market, rose slightly to around 26.
Cisco was the biggest Dow decliner, down 4.5 percent, after leading the pack on Wednesday amid a wave of tech optimism. The company beat analyst expectations on both earnings and revenue but cautious comments from CEO John Chambers rattled the market a bit. Chambers said that the company is emerging from the downturn gaining market share but there is still reason for caution, given the weak job market. He also said he is closely watching events in Europe, which accounts for 20 percent of the company's revenue.
Today, Chambers did a little damage control, saying his cautious remarks were "overinterpreted."
This came after encouraging outlooks from both IBM and Intel on Wednesday. IBM said it expects to earn at least $20 a share by 2015, and Intel said it expects to double its earnings growth in the next few years.
Both IBM and Intel today finished lower.
Alcoa was the lone gainer on the Dow, up 2. 7 percent, amid expectations that aluminum prices may go higher as China raises its electricity prices.
Adding to the pressure on the market, initial claims for unemployment benefits fell slightly to 444,000, the fourth straight decline, but the prior week was revised higher.
Investors shrugged off news that Portugal agreed to tough new austerity measures, shifting their focus instead to the U.S. economic outlook.
Citigroup said it sees no systemic riskin the banking industry from the euro zone's debt crisis. The bank plans to put more resources into Asia to capitalize on the region's growth. Citi shares lost more than 2 percent.
Financials were among the biggest decliners following news that the New York attorney general was probing eight banksto see if they duped the ratings agencies about the quality of the securities they were offering.
The eight banks are: Goldman Sachs, Morgan Stanley,UBS, Citigroup, Credit Suisse, Deutsche Bank, Crédit Agricole and Merrill Lynch, which is now owned by Bank of America.
Ford shares relinquished earlier gains, down over 2 percent, after CEO Alan Mulally said at the company's annual shareholder meeting that the automaker should be"solidly" profitable this yearand see "continuing improvement" next year.
Rival GM said it will release "solid" first-quarter resultswhen it reports on Monday.
Kohl's beat earnings expectations, helped by a strong recovery in consumer spending and its exclusive product line, but the company's outlook fell short of expectations. Executives said they preferred to be conservative in their forecast and weren't ready to show too much optimism.
This came a day after Macy'sswung to a profit, hitting its earnings target and narrowly beating revenue projections.
Capital One shares slipped after Macquarie downgraded the stock to "neutral" from "outperform," as the stock drifts toward its $49 price target. The brokerage said it thinks the company is well-positioned but loan-growth prospects remain a concern.
In M&A news, German software giant SAPplans to buy smaller rivalSybase for $5.8 billion. SAP's motive is apparently to acquire technology that delivers software to smartphones.
Volume was average with about 1.2 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 9 to 2.
Still to Come:
THURSDAY: Earnings from CA, Nordstrom and Nvidia after the bell
FRIDAY: Government's retail-sales report; industrial production; consumer sentiment; business inventories; earnings from JCPenney
More From CNBC.com:
- Slideshow: The World's Biggest Debtor Nations
- Government Debt Issuers Most Likely to Default
- America’s Double-Dip Real Estate Markets