Stocks Slump after Cisco Disappoints
Stocks slumped on Wednesday as lower-than-expected revenues from networking gear maker Cisco (CSCO ) offset investor enthusiasm about CEO Carly Fiorina leaving computer printer maker Hewlett-Packard (HPQ ).
The Dow Jones industrial average ended off 60.52 points, or 0.56%, to 10,664.11. The broader Standard & Poor's 500 index eased 10.31 points, or 0.86%, to 1,191.99. The Nasdaq composite index was off 34.13 points, or 1.64%, to 2,052.55.
Thursday will be another busy day on the earnings front. Among the companies due to report are chipmaker Analog Devices (ADI ), PC maker Dell (DELL ), drugmaker Watson Pharmaceuticals (WPI ) and office supply outfit Office Depot (ODP ).
On the economics front, the trade deficit for December is expected to narrow to $57.5 billion from $60.3 billion in the previous month. Meantime, first-time jobless claims for the week ended Feb. 10 are seen rising to 330,000 from 316,000.
On Wednesday, investors were downhearted after tech bellwether Cisco's lackluster revenue numbers, even though the company posted profits in line with expectations.
HP said Fiorina was leaving immediately, citing differences on how to execute corporate strategy. HP's CFO Robert Wayman was named CEO on an interim basis. Fiorina has been under pressure in recent months as earnings have failed to meet expectations, notes S&P MarketScope.
Struggling doughnut chain Krispy Kreme (KKD ) announced it would axe 25% of its non-store staff to maintain cash levels.
Health insurer Cigna ()" channel="pi"/>) posted higher quarterly profits on lower revenue as it realized a one-time gain.
Also in insurance, American International Group (AIG ) posted 11% higher profit thanks to higher earnings from premiums and investments.
On the oil front, crude which has traded sideways for most of the session, is now below the $45 mark as fundamentals--steady weather patterns, still-firm global supplies--remains supportive of softer price action. Treasury Market
U.S. Treasuries closed higher in price with the yield on the 10-year Treasury falling to 3.98% as the second leg of the quarterly refunding was marked by strong demand, and this amid considerable talk regarding a possible alteration of the Fed's statement that might include dropping the words "measured" and "accommodative". The dollar also eased against other major currencies amid much cautious trading and profit-taking ahead of the trade balance figures due out Thursday.
European stock markets closed lower on Wednesday. In London, the Financial Times-Stock Exchange 100 index fell 5.10 points, or 0.10%, to 4,990.40 even though the U.K. December Trade deficit narrowed to 4.4 billion pounds from November's 4.7 billion pounds; U.K. December industrial production rose 0.5% from 0.4% in November, which was revised from 0.2%. Atlantic Global was up after the company said 2004 revenue probably rose 10%.
Germany's DAX index was off 18.24 points, or 0.42%, to 4,353.15. Schering was lower after the company, which reported a 1% decrease in fourth quarter sales, announced it is cutting 900 jobs and closing half its production sites. Elmos Semiconductor was up after reporting full-year profit rose 37%. MediGene was higher after reporting fourth quarter earnings surged with help from sales of prostate cancer drug Eligard.
In Paris, the CAC 40 index eased 11.15 points, or 0.28%, moving to 3,969.62. CNP Assurances was higher after reporting its fourth quarter revenue rose 18% on increased demand for its retirement savings plans. Gemplus International was lower after the company reported prices of its smart cards fell 11% due to higher discounts.
Asian markets finished mixed on Wednesday. Japan's Nikkei average was off 17.08 points, or 0.15%, to close at 11,473.35. The lower close occurred despite a drop in the yen versus the dollar. Yen weakness generally draws buyers to Japanese exporters, but the dollar's strength did little to inspire buying of exporters. Part of the reluctance to make a big commitment might have been the result of balanced portfolios ahead of February options settlements. Automakers including (Toyota ) and Nissan made small advances in heavy volume. Decliners were led telecom and high-tech.
Hong Kong's market was closed in observance of Chinese New Year.