Stocks Extend Losses Amid Profit Jitters, Tech Glitch

NEW YORK – Stocks extended their losses Friday after Juniper Networks cut its revenue forecast and a system failure on the New York Stock Exchange continued to trouble the market.

Technical problems plagued the New York Stock Exchange for more than four hours, completely shutting down the world's biggest equity market for much of the morning in a snafu that rippled through other U.S. exchanges and sidelined billions of investor dollars.

At 10:10 a.m. ET, the New York Stock Exchange halted all trading of stocks because of a software problem. It resumed trading at 11:35 a.m. ET, but it took a few more hours for all the stocks to be trading. It was the first time such a system glitch paralyzed the Big Board since Oct. 26, 1998, the exchange said.

The technology-packed Nasdaq Composite Index, which continued to trade throughout the morning, led the way down after a weaker revenue forecast from networking company Juniper Networks offset optimism built up by computer-chip giant Intel Corp.'s  benign sales outlook.

The Nasdaq ended down 48.93 points, or 2.16 percent, at 2,215.07.

The Dow Jones industrial average skidded 113.74 points, or 1.03 percent, to 10,977. Ten of the blue-chip average's issues failed to open in the morning, and a complete average was available only when International Business Machines Corp. resumed trading at around 1:40 p.m. ET.

The broader Standard & Poor's 500 Index fell 11.99 points, or 0.94 percent, to 1,264.97.

``We ran out of gas on the semiconductors, and Juniper undercut us on the networking side so the whole thing began to dissolve,'' said Larry Wachtel, analyst at Prudential Securities.

Intel, the world's largest semiconductor maker, said after the close on Thursday that quarterly sales will be within its previous range of estimates, although at the low end, lifting hopes the worst is over for the battered chip industry.

But networking equipment maker Juniper Networks dampened the early enthusiasm after it said it slashed quarterly revenue estimates and would cut its work force by 8-9 percent because of the slowdown in the telecommunications and and network service provider sectors.

Traders may also be locking in profits after recent gains in the Nasdaq market made as they grew optimistic that the worst is behind the battered group, Rice said. ``Optimism is prevailing all over so this is probably time to take a few bucks off the table and prepare yourself for a better buying opportunity.''

Intel was the Nasdaq's most heavily traded share, and it followed the rest of the semiconductor sector lower despite early optimism that the lack of nasty surprises in the report supported the case for a near-term rebound in the industry. Intel shares fell 41 cents to $30.73.

``No one expected Intel to come out with any bad news, and basically they didn't,'' said Peter Cardillo, director of research at Westfalia Investments.

Juniper was second behind Intel in volume on the Nasdaq, falling more than 14 percent, down $6.73 at $39.90.

Investors are holding onto any glimmer of hope for recovery in the corporate earnings outlook, but they are also ready to turn tail and lock in profits at the first sign of worse-than-anticipated results, traders said.

With no key economic data due until next week, traders are watching out for more corporate news as the confession season -- when companies traditionally confess to shortfalls in results before actually reporting them -- gets under way.

Investors have been anxiously searching for signs Corporate America is seeing the benefits of the Federal Reserve's aggressive interest-rate cuts. Lower interest rates cut the cost of borrowing, thus encouraging individuals and businesses to spend, which bolsters growth.

The Fed has cut rates by 2-1/2 percentage points so far this year.

After Thursday's close, computer network equipment maker 3Com Corp. said it expects quarterly sales to fall short of previous guidance by about $100 million and plans to discontinue its line of consumer cable and DSL modems. 3Com slipped 10 cents to $5.56.

Internet search software maker Verity Inc. said it has filed a lawsuit in a U.S. district court against software maker BroadVision Inc., saying BroadVision violated certain Verity copyrights and engaged in unfair competition, among other claims. Verity climbed $2.95 to $22.26, and BroadVision slipped 14 to $6.03.

Declining issues led advancers 6 to 5 on the NYSE. Volume came to 721.65 million shares, compared with 1.08 billion Thursday - a disparity reflecting the NYSE's earlier problems. The preliminary number was the lightest day of trading on the NYSE this year.

The Russell 2000 index was off 1.49 at 513.88.

Overseas, Japan's Nikkei stock average gained 1.2 percent. Germany's DAX index was virtually unchanged, as was Britain's FT-SE 100. France's CAC-40 fell 0.3 percent.

-- Reuters and the Associated Press contributed to this report.