Published January 13, 2015
Stocks slumped Thursday as a cautious outlook from networking giant Cisco Systems convinced skittish investors to unload shares for the fifth straight session.
A late-day sell-off dragged down the broad Standard & Poor's 500 index, marking the longest losing streak since the market reopened after a four-day shutdown caused by the Sept. 11 terror attacks on the United States.
The blue-chip Dow Jones industrial average lost 27.95 points, or 0.29 percent, to 9,625.44, erasing earlier gains that sent the average as high as 9,743, while the tech-laced Nasdaq Composite Index dropped 30.60 points, or 1.69 percent, to 1,782.11. The S&P 500 dropped 3.34 points, or 0.31 percent, to 1,080.17.
A drop in claims for unemployment benefits and strong sales from retailers helped boost blue-chip stocks for most of the session, but investors pulled out in the last 30 minutes of trading.
"This market is very suspicious, and we're hanging on by the skin of our teeth," said Michael O'Hare, head of block trading for Lehman Brothers. "The theme here is that people are trading on fear."
Some of the fear stemmed from Enron Corp. after accounting irregularities led to its collapse. Others are worried corporate profits are still struggling amid slumping sales.
Cisco led technology stocks lower after the largest maker of equipment that directs data traffic on the Internet posted lower earnings due to the communications spending slowdown. The results were almost twice what analysts had expected, but the company sounded a cautious note on the current quarter.
"Although the (earnings) number was good, people are concerned about the deferred revenue line and their guidance of flat sequential growth," said Michael Kayes, chief investment officer of Eastover Capital Management, which has about $300 million under management.
The dim outlook dragged down shares of the rest of the networking sector.
Cisco fell $1.55 to $17.06 on the Nasdaq and was that market's most-active stock, with more than 159 million shares traded.
Networking stocks in decline included Riverstone Networks Inc. , which fell 71 cents to $10.19, Extreme Networks Inc. , which dropped 66 cents to $10.51, and Juniper Networks Inc. , which slid 41 cents to $13.41.
Blue chips rose for most of the day after the latest unemployment data showed the number of U.S. workers seeking jobless benefits fell last week.
The number of U.S. workers seeking jobless benefits fell last week by 15,000 to a seasonally adjusted 376,000. Initial claims have remained below the key 400,000 level for five weeks in a row, a data point that some took as a sign of improving labor market.
Retailers' shares rose after some companies reported better-than-expected sales.
These reports "may in fact be a broader reading, a broader call that we are in fact out of recession," said Michael Niemira, an economist at Bank of Tokyo-Mitsubishi.
Kohl's Corp. , for one, gained 12 cents to $67.20.
AnnTaylor Stores Corp. rose $2.86, or 7.5 percent, to $40.94. The women's apparel retailer said it sees its quarterly and 2002 earnings above analysts' estimates as the company opens 45 new stores during the year.
Another encouraging sign has come from Wall Street analysts, more of whom are raising earnings estimates than slashing them for the first time in 15 months -- a sign to some the worst of market declines may be over.
WorldCom Group , owned by voice and data services company WorldCom Inc., led shares of battered telecommunications stocks higher. WorldCom rose 83 cents to $7.52 after the telephone and data services provider reported lower profits, but dismissed rumors of accounting problems and impending bankruptcy.
But WorldCom's MCI Group shares, which track the residential long-distance telephone operations and dial-up Internet business, fell $1.45 to $7.61.
Telecommunications stocks have been slammed this year on worries high debt levels could hurt growth and profits. The North American Telecommunications Index has tumbled almost 21 percent this year, but was up 0.7 percent on Thursday as investors snapped up some beaten-down issues.
Declining issues led advancers more than 5 to 4 on the New York Stock Exchange, where volume came to 1.42 billion shares, down from 1.67 billion a day earlier.
The Russell 2000 index dropped 4.01 to 458.40.
Overseas, Japan's Nikkei stock average gained 1.7 percent. In Europe, Germany's DAX index advanced 1.2 percent, Britain's FT-SE 100 climbed 1.1 percent, and France's CAC-40 rose 0.5 percent.
Reuters and the Associated Press contributed to this report.