Tech companies drag down US stocks

0

The Dow Jones industrial average fell by 10.6 points to close on Thursday at 12,229.29

Stocks finished flat, dragged down by Cisco Systems and Akamai Technologies both issuing weak earnings forecasts, raising concerns about business and technology spending.

The Dow Jones industrial average ended an eight-day winning streak, entirely as a result of Cisco’s 14% drop. Other indexes managed slight gains.

The Dow lost 10.6 points, or 0.1%, to close at 12,229.29. The S&P 500 rose a point, or less than 0.1%, to 1,321.87. The Nasdaq composite rose 1.38 to close at 2,790.45.

Cisco, the world’s largest networking equipment maker, had the largest fall of the 30 stocks that make up the Dow. The company said that its fourth-quarter income slid 18% 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 number one, it’s hard to stay there.” Mr Lutts said the weak results reflect Cisco’s struggle to stay competitive, not necessarily weakness in the technology industry overall.

Akamai Technologies fell 15% 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 US companies.

Whole Foods Market rose 12% after the natural foods grocer reported a 79% increase in first quarter net income. It had the biggest gain of any stock in the S&P 500.

Sprint Nextel rose 5.7% after the company increased its subscribers under contract for the first time in about four years.

Rising stocks narrowly outpaced declining ones on the New York Stock Exchange. Volume was 1 billion shares.

Stocks traded lower much of the day despite positive news on jobs. The Labour 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.

This site uses Akismet to reduce spam. Learn how your comment data is processed.