Apple Downgrade Bites Nasdaq; Sinking Oil Price Limits Losses

U.S. stocks fell Monday, with tech shares giving back recent gains as a brokerage downgrade hit shares of Apple Computer Inc. (AAPL) and a legal battle hurt chip maker Qualcomm (QCOM) Inc.

The Dow Jones industrial average was down 8.72 points in light trading, or 0.07 percent, at 11,670.35. The Standard & Poor's 500 Index was down 4.53 points, or 0.34 percent, at 1,331.32. The Nasdaq Composite Index was down 20.83 points, or 0.92 percent, at 2,237.60.

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Investors bet that Qualcomm would lose in legal disputes to rival Broadcom Corp., making Qualcomm the biggest drag on both Nasdaq and the broad S&P 500 index.

Tech companies are among stocks that have underpinned the overall market's recent advance.

Shares of Wal-Mart Stores Inc. (WMT) fell, weighing on both the Dow and S&P, after the world's largest retailer on Saturday estimated that sales at U.S. stores open more than a year last month rose 1.8 percent, the low end of its forecast.

A 3 percent drop in oil prices helped limit market losses.

"The way Qualcomm is trading today is telling you Qualcomm has more to lose ... but it's just speculation," said Owen Fitzpatrick, head of U.S. equity group at Deutsche Bank Private Wealth Management in New York. But, he said, "there's a little bit of a giveback here in technology in general."

Trading on the New York Stock Exchange was light, with many traders off for the Jewish holiday of Yom Kippur.

Casino stocks rose after private equity investors offered to buy Harrah's Entertainment Inc. (HET) Harrah's stock, which rose 13.9 percent, or $9.25, to $75.68, registered its biggest daily percentage gain since October 1998. Shares of rivals MGM Mirage (MGM), Pinnacle Entertainment Inc. (PNK) and Boyd Gaming Corp. (BYD) all rose at least 3 percent.

A preliminary court hearing related to allegations by Qualcomm of trade secret misappropriation by Broadcom is scheduled for later Monday. Qualcomm shares fell 4.7 percent, or $1.69, to $34.66, while Broadcom shares gained 1.7 percent, or 51 cents, to $30.85.

Citigroup lowered its rating on Apple to "hold" from "buy," saying much of the positive aspects of Apple's business were already priced into shares. Apple shares fell 2.8 percent, or $2.12, to $74.86 on Nasdaq.

Among the day's economic data, the Institute of Supply Management's monthly reading of the U.S. manufacturing sector came in below expectations but analysts said it was strong enough to support the view that the economy was still expanding.

November crude fell $1.88 to settle at $61.03 a barrel, as healthy fuel inventories in the United States offset plans by Nigeria and Venezuela to trim output.

Wal-Mart shares dropped 1.8 percent, or 88 cents, to $48.44.

About 1.38 billion shares changed hands on the NYSE, below last year's daily average of 1.61 billion, while on Nasdaq, about 1.85 billion shares traded, about even with last year's daily average of 1.80 billion.

Declining stocks outnumbered advancing ones by a ratio of about 9 to 7 on the NYSE and by 2 to 1 on Nasdaq.

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