Cisco, Akamai pull technology stocks lower
NEW YORK – Stocks finished flat on Thursday, dragged down by Cisco Systems Inc. and Akamai Technologies Inc. Both issued weak earnings forecasts, raising concerns about business and technology spending.
The Dow Jones industrial average ended an eight-day winning streak, entirely a result of Cisco's 14 percent drop. Other indexes managed slight gains.
Cisco, the world's largest networking equipment maker, had the largest fall of the 30 stocks that make up the Dow. The company said late Wednesday that its fourth-quarter income slid 18 percent because of lower sales to government agencies, a problem that could worsen over the next few quarters.
"Cisco is stumbling," said Rob Lutts, president and chief investment officer of Cabot Money Management. "When you're No. 1, it's hard to stay there." Lutts said the weak results reflect Cisco's struggle to stay competitive, not necessarily weakness in the technology industry overall.
Akamai Technologies fell 15 percent after the company said competitors are forcing it to offer lower prices for its Web streaming services. Akamai was the weakest stock in the Standard & Poor's 500 index of large U.S. companies.
Whole Foods Market Inc. rose 12 percent in after the natural foods grocer reported a 79 percent increase in first quarter net income. It had the biggest gain of any stock in the S&P 500.
Sprint Nextel Corp. rose 5.7 percent after the company increased its subscribers under contract for the first time in about four years.
The Dow lost 10.6 points, or 0.1 percent, to close at 12,229.29. The S&P 500 rose a point, or less than 0.1 percent, to 1,321.87. The Nasdaq composite rose 1.38 to close at 2,790.45.
Rising stocks narrowly outpaced declining ones on the New York Stock Exchange. Consolidated trading volume was 4.2 billion shares.
Stocks traded lower much of the day despite positive news on jobs. The Labor Department said 383,000 people applied for unemployment benefits for the first time last week, the lowest level in nearly three years. Economists say applications would need to fall to 375,000 or below on a consistent basis before the unemployment rate will decline.
The Commerce Department also reported that businesses at the wholesale level increased their inventories in December even though demand for their products slowed. The hope is that increased demand will keep factories busy.