Stocks Close Down, Off Lows of Day; Cisco Falls
Stocks closed lower Thursday, continuing a losing streak amid light volume and continued worries over the state of the economy.
The Dow Jones Industrial Averageended down 58.9 points, or 0.6 percent, to 10,319.95. The blue-chip index is in negative territory for the year, down 1 percent.
The declines were led by Cisco,American Express and Caterpillar .
Verizon and Travelers led the Dow gainers.
Office Depot and Motorola surged more than 4 percent, leading the S&P 500.
The S&P 500 slipped 5.86 points, or 0.5 pecent, to 1,083.61, while the tech-heavy Nasdaq fell 18.4 points, or 0.8 percent to 2,190.27. The CBOE Volatility Index, the widest gauge of fear in the market, rose above 25, after spiking almost 15 percent in the previous session.
Technology, industrials and financials were the worst performing sectors, while telecom, and health-care ended higher.
Materials also rose Thursday, with Alcoa , International Paper and Newmont Mining among the leaders.
Stocks are 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 Pado, 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," Pado said.
In the absence of good news, investors will "seek out dividends and preservation of capital," he added. And defensive stocks like telecom, food and beverage, and energy should do well, while more economically sensitive sectors, like consumer discretionary stocks, will suffer.
Cisco was the biggest drag on the sector, after the maker of computer networking equipment reported earnings that fell short of estimates on Wednesday. At least 12 brokerages subsequently cut their price targets on the tech giant.
Cisco, which often signals the direction of business spending, is getting "mixed signals"from customers, CEO John Chambers said on CNBC. The company predicts sales for the next quarter will be between $10.65 billion and $10.83 billion, less than the $10.95 billion anticipated by analysts surveyed by Thomson Reuters.
Rivals NetApp and Juniper Networks both tumbled more than 6 percent.
Hewlett-Packard shares fell along with its peers Thursday. Earlier, the company confirmed the resignation of a former aide to former CEO Mark Hurd, who resigned last week after an investigation found he filed inaccurate expense claims.
Elsewhere in tech news, Research-in-Motion shares suffered, dropping more than 3 percent amid news the company's Blackberry services will be shut down in India if the smartphone maker doesn't address the nation's security concerns by Aug. 31, the government said on Thursday.
Shares of semiconductor chip makers were mixed after a disappointing few days and a downgrade of the sector to "underperform" from "perform" by BMO and concerns of a "chip glut." Advanced Micro Devices and Intel rose but Qualcomm was down nearly 3 percent.
Barnes & Noble said it could not reach a deal to end a rift with billionaire investor Ron Burkle, casting doubt on the bookselling chain's ability to attract buyers and raising the specter of a proxy battle.
In the day's economic news, the government said weekly jobless 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.
Also, more homeowners foreclosedin July, and banks took over their homes at a record pace, RealtyTrac reported Thursday.
BP shares slid after the U.S. Department of Labor said the oil firm will pay a record fine for safety violations at its troubled Texas City, Texas refinery. Secretary of Labor Hilda Solis will announce the fine in a conference call later this afternoon.
In October, BP was slapped with $87.4 million in proposed fines by the U.S. Occupational Safety and Health Administration for safety violations at the refinery, which was the site of a deadly explosion in 2005.
In other earnings news, Kohl's shares fell after the retailer reported a weaker-than-expected outlookfor the second half of the year. The firm, however, posted better-than-expected earnings. S&P Equity cut its price target on Kohl's to $58 from $62.
And Sara Lee slid after the foodmaker posted lower-than-expected quarterly sales, hurt by weak demand for commodity meats and private-label bakery products.
General Motors posted its biggest quarterly profit in six years, a day ahead of an expected IPO filingthat will clear the way for the U.S. government to relinquish its majority stake in the top US automaker.
Also, GM announced that CEO Ed Whitacre will step down on Sept. 1 but will remain as chairman until year-end.
Advanced Auto Parts shares were sharply higher after the company reported a 26 percent quarterly profit increase and raised its full-year outlook.
Retailer Nordstrom , chipmaker Nvidia and Autodesk are among the companies expected to report earnings after the closing bell Thursday. And JCPenney is scheduled to release earnings Friday morning.
Volume on the New York Stock Exchange was light, with just over 1 billion shares changing hands. Decliners led advancers about 4 to 3.
In IPO news, Indian travel company MakeMyTrip surged more than 70 percent in their market debut as investors clamored for a firm that can benefit from the country's growing middle class.
Gold prices jumped above $1,217 an ounce, its biggest one-day rally in two months, after the weak economic data prompted a surge of interest in the safe-haven assets.
Most of the gold miners, including GoldCorp and Newmont Mining were trading above 2 percent.
Meanwhile, oil fell near $76 a barrel,marking a third straight session of sharp losses.
Treasurys remained lower after the government auctioned $16 billion of 30-year bonds, which had a high yield of 3.954 percent and a bid-to-cover of 2.77.
Ahead This Week:
THURSDAY: Earnings after the bell from Nordstrom, Nvidia and Autodesk.
FRIDAY: CPI, retail sales, consumer sentiment, business inventories; Earnings before the bell from JCPenney
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