Stocks dropped for a third straight session as a surprise rise in initial jobless claims and Cisco’s cautious outlook raised doubts about the strength of the economic recovery. Federal Reserve’s statement from Tuesday also weighed on sentiments.
Cisco’s observations that it is “seeing a large number of mixed signals in both the market and from our customers’ expectations, and we think the words “unusual uncertainty” is an accurate description of what is occurring,” troubled investors and sent technology stocks to the top of the decliners’ list. Cisco (NASDAQ:CSCO) plunged 10%. The tech-heavy Nasdaq composite index, hurt by the weakness in its technology components, fell 18 points, or 0.8%, to 2190.27.
Meanwhile, BMO downgraded semiconductor shares to “underperform” from “perform,” citing concerns of a glut in chip supplies. One reason why Cisco’s outlook weighed on markets could be the fact that it was one of the few big companies that reported its results in July, and investors were concerned that a weak July could find its way into current operating results.
The Dow average extended its three-day drop to almost 380 points. The Dow average, down 110 points in the morning session, somehow trimmed the losses as the day progressed but still closed down 59 points, extending its three day loss to 379 points. The broader S&P500 index fell 6 points, or 0.5%, to 1083.61.
Only three of the ten S&P500 industry sectors could manage gains on the day. Only telecommunications (+0.8%), basic materials (+0.4%), and health care (+0.4%) sectors could manage gains on the day. Those ending on the losing side were industrials (-0.9%), financials (-0.6%), oil and gas (-0.6%), utilities (-0.4%), consumer goods (-0.3%), and consumer services (-0.1%).
A $16 billion auction of 30-year bonds witnessed relatively weak demand, sending the yield up to 3.945%. The yield on the 10-year note rose to 2.73% from 2.72% late Wednesday.
After the close Thursday, Nordstrom (NYSE:JWN) posted interims showing a 39% increase in profits from a year earlier, on an 8.4% comparable sales gain. The firm maintained 2010 guidance.
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