Stocks finished mixed Wednesday, with technology shares losing more ground after disappointing earnings news from tech bellwether Cisco Systems (CSCO).
The tech-heavy Nasdaq composite index fell 20.82 points, or 1.24%, to 1,652.68. The Nasdaq finished the session below its 50-day moving average, a key technical indicator.
The blue-chip Dow Jones industrial average rose 25.42 points, or 0.28%, to 9,061.74. The broader Standard & Poor's 500 index moved ahead 1.62 points, or 0.17%, to 967.08.
After Tuesday's market close, Cisco announced a higher fourth-quarter profit and its pro forma earnings per share met analysts' consensus forecast, but cash flow and revenue decreased from year-ago levels. Although the networking gear maker said it is seeing positive signs of economic recovery and its orders rose, Cisco forecasted flat revenue growth for the upcoming quarter. Cisco shares dropped more than 6% Wednesday.
In other tech sector news, shares of e-commerce company CheckFree (CKFR) lost 20% after the company lowered guidance for the first part of fiscal 2004.
Biotechnology outfit ICOS (ICOS) reported a narrower second quarter loss, but said it would lose more moeny than expected in 2004 and that profitability was two to three years away. Its shares tumbled 16%.
Managed health-care stocks also fell on news that Citigroup lowered its industry rating to marketweight from overweight. Citigroup sees good 2004 EPS growth of 14% for the group, but says the stocks may weaken before then from pricing concerns and slow enrollment.
A few sectors moved higher, though, and helped boost the broader market. Homebuilders rallied after Toll Brothers (TOL) gave an upbeat outlook for third-quarter revenue growth. And many investment bank and brokerage stocks rose after Merrill Lynch upgraded Lehman Brothers (LEH) to buy from neutral.
The energy sector also fared well Wednesday, helped by a solid quarterly report from oil and gas exploration company Devon Energy (DVN), which swung to a profit in the second quarter. Power companies Calpine (CPN) and KeySpan (KSE) both reported second-quarter losses, vs. profits a year ago. KeySpan traded slightly lower, while Calpine and Devon shares were solidly higher.
The European Commission said Wednesday that it intended to fine software giant Microsoft (MSFT) for anticompetitive behavior in the server and media player markets. A final ruling was expected within months, the Commission said.
In other corporate news, the Securities and Exchange Commission gave preliminary approval to increased disclosure regulations for corporate boards of directors. Companies would have to disclose more about director selection and better facilitate shareholder-board communication.
On the commodities front, oil prices ticked to their highest levels since the beginning of the Iraq war. Traders were mulling supply concerns and terrorist activity.
No major economic data was released on Wednesday, but Thursday provides a full plate of economic news. Expected reports are U.S. second-quarter productivity, initial jobless claims for the week ended Aug. 2, June wholesale trade, and June consumer credit.
Also, Thursday brings more corporate earnings news. Among companies slated to report are embattled hospital operator Tenet Healthcare (THC) and graphics processor maker NVIDIA (NVDA).
Prices of U.S. Treasuries moved higher Wednesday, after an $18 billion auction of 5-year notes. The benchmark 10-year note's yield settled at 4.28%.
With no major economic data expected to be released Wednesday, focus was on the auction. "The better than expected results from the 5-year auction were good news for the bond market," notes economic research outfit MMS International.
In addition to a host of economic data, Thursday brings an $18 billion auction of 10-year notes.
European stock markets were lower Wednesday. In London, the Financial Times-Stock Exchange 100 shed 50.6 points, or 1.23%, to 4,070.4, on profit taking and some uncertainty about the global economy.
In Germany, the DAX Index fell 62.7 points, or 1.82%, to 3,375.66, as German unemployment rose a disappointing 7,000 as government reforms have not taken hold yet. There was also a report by the DIW economic institute that said Germany probably fell into recession in the second quarter, although June factory orders rose. In France, the CAC 40 was down 61.46 points, or 1.93%, to 3,126.15, following news that French consumer confidence was unchanged in July.
In Asia, major stock indexes ended lower. Japan's Nikkei index finished down 58.67 points, or 0.63%, to 9,323.91, in a low-volume trading session. Meanwhile, Hong Kong's Hang Seng index fell 189.84 points, or 1.87%, to 9,987.54.