Stocks Add to Losses, Led by Technology

Stocks added to losses on Wednesday, as stumbling technology stocks offset gains in energy and materials.

The Dow Jones Industrial Average fell more than 30 points, led by Microsoft and Hewlett-Packard . Alcoa and Procter & Gamble rose.

The S&P 500 and the Nasdaq also declined. The CBOE Volatility Index, widely regarded as the best gauge of fear in the market, rose above 22.

Pressure was on the technology sector, as Adobe Systems shares plummeted 20 percent after it announced a surprisingly disappointing fourth quarter forecast.

PMC-Sierra's shares sank after it lowered its revenue outlook on Tuesday.

And Microsoft shares fell nearly 2 percent after the tech giant announced Tuesday after-the-bell that it raised its dividend by 25 percent to $0.16 per share.

Meanwhile, Research in Motion's shares rose after news the BlackBerry maker may unveil a tablet computer to compete with the iPad, according to the Wall Street Journal.

Ebay's shares also sank after the Internet auction company reported the president of its biggest unit was leaving the company and that its earnings-per-share would be at the upper end of its forecast for the third quarter, according to Reuters. Lorrie Norrington was the president of eBay Marketplaces, which provides most of the revenue and profits for the retailer.

Meanwhile, metals and mining stocks were leading the S&P 500, led by Cliffs Natural Resources and Freeport-McMoran Copper & Gold .

Gold, meanwhile, hit another record high above $1,293 on Wednesday, as the dollar sank after the Federal Reserve signaled it would lend support to the U.S. economy if needed.

Financial stocks were also among the laggards. Shares of Jefferies sank after the investment bank reported lower third-quarter profit and revenue as trading activity slowed.

Rival investment banks and brokerages also declined, including Goldman Sachs , Stifel Financial and Morgan Stanley .

In earnings news, General Mills quarterly profit beat expectations and the company reaffirmed its full-year outlook based on strong sales of its cereals, yogurts, and snacks, although its quarterly sales slightly missed expectations.

And shares of CarMax soared to the top of the S&P 500 Index after the used car dealership chain reported a 5 percent boost in profit in its fiscal second quarter, as revenues rose 13 percent. The company benefited from consumers affected by the economy, who favored previously owned cars and trucks.

Bed Bath & Beyond and Copart are among companies reporting after the bell.

Blockbuster shares tumbled after the video-rental retailer was reportedly readying a bankruptcy filingin the next few days sparked by a shift in consumer preferences to Internet-based video.

Novartis' shares were slightly lower after the company announced the U.S. Food and Drug Administration approved Gilenya, an oral drug to slow the disabling symptoms of multiple sclerosis.

Fertilizer producer Agrium rose slightly after Bank of America Merrill Lynch raised its rating on the stock to "buy" from "neutral," citing a stronger earnings outlook and its potential role in increased M&A in the agricultural stock sector.

Meanwhile shares of Potash were lower after the fertilizer company filed a complaint with the Securities and Exchange Commission against BHP Billiton , which is trying to buy Potash.

Elsewhere, the prospect of easing by the Federal Reserve has currency traders on alert for intervention by the Japanese Prime Minister in the yen. Last week the Japanese government sold yen for the first time in more than six years to offset the surging value of the currency against the dollar.

In economic news, the Federal Housing Finance Agency reported Wednesday that U.S. home prices fell 0.5 percentin July from June, and 3.3 percent from a year earlier.

Also in housing news, demand for home loans fell for a third straight week, even as 30-year fixed-rate mortgages dropped to 4.44 percent. An index of both purchase and refi applications fell to a seasonally-adjusted 1.4 percent last week, as purchase loan demand fell 3.3 percent and refi requests slipped 0.9 percent, according to The Mortgage Bankers Association.

In its statement Tuesday, the Federal Reserve said it was ready to take necessary steps to help the recovery and that inflation was getting too low. Some, but not all, analysts believe the Fed's statement could lead to a round of quantitative easing, by purchasing bond assets.

In a note to clients, Stifel Nicolaus said, "We believe yesterday’s policy statement represented another significant step toward the eventual resumption of QE."

Also, investors will be paying attention to who replaces White House economic adviser Larry Summers, who plans to leave his post at the end of the year. Summers, a former Treasury secretary, will return to Harvard.

SEC Chairman Mary Schapiro speaks to traders at the Securities Traders Association Conference at 2 p.m., and the Senate Banking Committee holds a hearing on oversight of the SEC.

Meanwhile, Treasury Secretary Timothy Geithner will testify before the House Financial Services Committee on the international financial system and financial regulatory reform.

Oil prices fell below $75 a barrelafter the U.S. Energy Information Administration (EIA) reported crude oil inventoriers rose by 1 million barrels the week before. 

On Tap This Week:
WEDNESDAY: Oil inventories; Wall Street & Washington Conference; Earnings after-the-bell from Bed Bath & Beyond.
THURSDAY: Weekly jobless claims; existing home sales; leading indicators; Chicago Fed President Evans speaks; Volcker speaks; FCC meeting on opening up new airwaves; Earnings from Rite Aid and Nike.
FRIDAY: Durable goods orders; New home sales; Richmond Fed President Lacker speaks; Philadelphia Fed President Plosser speaks; NY Film Festival; Earnings from KB Home .

More From