US stocks tumbled on Wednesday, led by a slide in tech shares after a disappointing report from bellwether Cisco Systems Inc triggered investor concerns about industry demand. Cisco, the largest network equipment maker, slid 3.3 percent to $17.63 a day after it reported revenue that fell shy of analysts' average forecast. It also said current quarter revenue would miss Wall Street expectations.
Even a 7 percent surge by Dow component Hewlett-Packard Co failed to excite the market. HP shot higher after Carly Fiorina, the chairman and chief executive of the computer and printer maker, was ousted.
The Dow Jones industrial average was down 60.52 points, or 0.56 percent, to close at 10,664.11. The Standard & Poor's 500 Index was down 10.31 points, or 0.86 percent, to finish at 1,191.99. The Nasdaq Composite Index was down 34.13 points, or 1.64 percent, to end at 2,052.55.
Trading was active, with about 1.51 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 1.96 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.
Decliners outnumbered advancers on the New York Stock Exchange by about 2 to 1 and by about 3 to 1 on Nasdaq.
"There's not a whole lot of good news out there today," said David Memmott, head of listed block trading at Morgan Stanley. "We're three-quarters of the way through earnings period and the market's had a pretty healthy run over the past two weeks and it's now a bit of 'back and sell.'"
"The biggest thing we had was Cisco, which is a bellwether technology, basically saying 'things are not robust, they're OK but they're less than expected', and the rest of the food chain is under pressure."
Semiconductor stocks with exposure to Cisco were weak, including PMC-Sierra Inc, down nearly 5 percent, or 49 cents, at $10.00; Broadcom Corp, down nearly 4 percent, or $1.20, at $31.67, and Marvell Technology Group Ltd, down nearly 3 percent, or $1.02, at $34.58.
"Cisco was a major disappointment," said Greg Palmer, head of equity trading at Pacific Crest Securities. "The issue with Cisco is that there are so many suppliers that lead into them. Cisco not quite coming in where people thought raises questions across the board about what end-demand really looks like."
Other declining tech stocks included chipmaker Intel Corp, a Dow component, down 11 cents at $23.30.
HP rose $1.39 to$21.53. Barry Randall, manager of the $100 million First American Technology Fund, which recently sold its shares in HP, said the stock was higher on expectations the group could now be broken up. Meanwhile, Merrill Lynch upgraded HP to "buy" from "neutral," saying a new chief executive "could be a catalyst for the shares."
Fiorina, who joined HP in 1999, became the lightning rod of criticism among investors and the Silicon Valley establishment for pushing through HP's merger with Compaq Computer in 2002.
But weighing on the Dow was International Business Machines Corp, down 1.5 percent or $1.43, at $92.70 amid expectations that Hewlett-Packard could become more of a competitive threat to IBM, according to Frank Dzubeck, president of Communications Network Architects, a technology analysis firm.
Aluminium company Alcoa Inc, also pulled on the Dow, falling 2.5 percent, or 76 cents, to $29.24. Alcan Inc, the world's second-largest maker of primary aluminium, dropped 4.8 percent, or $1.83, to $36.25, as analysts cut their profit forecasts for the company.
Oil prices closed little changed, reversing earlier gains that saw them briefly jump $1. But that failed to buoy stocks, which generally benefit from lower crude prices. Crude for March delivery settled up 6 cents at $45.46 a barrel.
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