Debt headwinds buffet stocks, but chipmakers shine

Technology stocks again outperformed after Broadcom Corp reported strong results on Monday night, the latest in a string of chip companies to delight investors. The stock jumped 9.4 percent to $38.20.

Shares of top Chinese search engine Baidu Inc rose 5 percent to $164.36, a day after it forecast revenue well ahead of Wall Street expectations.

The SPDR Technology Select Sector Index exchange-traded fund up 0.3 percent.

Second-quarter earnings that have been mostly stronger than expected have offered protective armor for a market battered by the debt debate.

At the close, the Dow Jones industrial average <.DJI> was down 91.50 points, or 0.73 percent, at 12,501.30. The Standard & Poor's 500 Index <.SPX> was down 5.49 points, or 0.41 percent, at 1,331.94. The Nasdaq Composite Index <.IXIC> was down 2.84 points, or 0.10 percent, at 2,839.96.

Among investors, retail clients appear more anxious than institutional ones over the failure of lawmakers to reach a deal on the debt ceiling, said Charles Lieberman, chief investment officer of Advisers Capital Management, LLC in Hasbrouck Heights, New Jersey.

"Retail investors I think are more easily scared, and they expressed concern," he said. "When we discussed the various options with them, they typically come to the conclusion there isn't a whole lot we can do to deal with the circumstances. Anything we can do could backfire."

Weighing on the Dow were shares of 3M Co , the conglomerate whose products range from Post-It Notes to specialty films for computers and televisions. Its share dropped 5.4 percent to $89.93, hurt by softness in some divisions even though its results met estimates.

It exerted a 38-point drag on the Dow, accounting for more than half of losses of the 30-component index on the day.

Among other decliners, Netflix Inc slid 5.2 percent to $266.91, a day after the movie rental company warned its red-hot subscriber growth would cool in the third quarter.

(Editing by Leslie Adler)