Stocks Decline; Cisco Leads Tech Down
Stocks were lower Thursday on light volume amid continued worries over the state of the economy.
The Dow Jones Industrial Averagewas down more than 40 points, after being down more than 70 earlier. About half the Dow components were down.
Cisco, WalMart and Microsoft, led the market lower. Verizon and Alcoa led gainers.
The S&P 500and Nasdaqwere also lower. The CBOE Volatility Index, the widest gauge of fear in the market, fell to above 25. Technology, consumer discretionary, and industrials were the worst performing sectors, while telecom, materials and health care were in positive territory.
The market headed lower from the start after jobless claims were unexpectedly weaker, and after the worst day of trading since mid-July.
The government said weekly claims rose 2,000 to 484,000 for the week ended Aug. 7, marking the highest point since Feb. 20. Economists had expected claims would fall 14,000.
The market is likely to remain weak through the fall, with no catalyst on the horizon, such as a change in monetary or fiscal policy, or an upswing in economic releases, to spark a buying spree, said Marc Prado, U.S. market strategist at Cantor Fitzgerald.
"When you look forward, what’s going to drive us from here? I can’t find a single thing," Prado said.
In the absence of good news, investors will "seek out dividends and preservation of capital," he added. Defensive stocks, like telecom, food and beverage and energy, should do well, while more economically sensitive sectors, like consumer discretionary stocks, will suffer, he said.
Cisco Systems is the biggest drag on the market, after its quarterly earnings fell short of estimates Wednesday. The tech company led the sector lower, with NetApp and Juniper Networks also down significantly.
Cisco, which often signals the direction of business spending, is getting "mixed signals"from customers, according to CEO John Chambers. The company predicts sales for the next quarter will be $10.65 billion to $10.83 billion, less than the $10.95 anticipated by analysts surveyed by Thomson Reuters.
Chip makers were mixed Thursday after a disappointing few days, with Intel higher despite a downgrade of its shares to "perform" from "outperform" by BMO. Sandisk was down more than 2 percent.
In the auto industry, General Motors CEO Ed Whitacre will step down as CEOon Sept. 1 but will remain as chairman. The news comes after the automaker reported a quarterly profit of $1.3 billion and is planning to file for its initial public offering Friday. GM has also reportedly finalized a $5 billion credit facility.
Meanwhile, the Treasury will sell $14 billion in 30-year bonds, following its sales of 3-year and 10-year notes earlier this week, with the results available shortly after 1 pm.
Advanced Auto Parts shares were sharply higher after the company reported a 26 percent quarterly profit increase and raised its full-year outlook.
Retailer Kohl's fell after reporting a weaker-than-expected outlook for the second half. of the year. The retailer, however, posted better-than-expected earnings.
Sara Lee sank after reporting a profitable fourth quarter on earnings of $187 million, or 28 cents per share, for the period ending July 3. Last year the company lost $14 million, or 2 cents per share. Sara Lee's sales rose 4.2 percent thanks to the food maker snagging higher prices for more items.
Retailer Nordstrom , chipmaker Nvidia, and Autodesk are among the companies out with reports after the closing bell.