Stocks fell on Thursday as weekly jobless claims unexpectedly rose and a sobering forecast from Cisco Systems
The stock of computer networking company Cisco lost 9.5 percent to $21.48 and weighed the most on both the Dow and Nasdaq, a day after cautious comments from its chief executive and a current-quarter revenue forecast that fell short of estimates. At least two brokerages cut their ratings on the stock.
On Wednesday, all three major indexes recorded their worst percentage declines in more than a month, erasing gains for the year in the aftermath of a gloomier outlook from the Federal Reserve.
Cisco CEO John Chambers warned of unusual uncertainty in the economy, surprising some investors who expected more reassuring comments. That was followed by data on Thursday showing the number of people filing new claims for unemployment insurance in the latest week rose to its highest level in nearly six months.
Cisco has always had a tendency to try to set a low if not accurate picture of what demand is for their product. They don't like to overpromise and under-deliver. That said, the commentary from John Chambers did cast a pall on the market, said Kim Caughey, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh, which owns the stock.
The PHLX semiconductor index <.SOX> hit a session low of 318.91, its lowest level in seven months, breaking through the lower end of the range of 324 to 377 it had been at since early May. In early afternoon trading, the SOX was down 1.2 percent at 326.24, following Wednesday's slide of over 4 percent.
The Dow Jones industrial average <.DJI> lost 56.23 points, or 0.54 percent, to 10,322.60. The Standard & Poor's 500 Index <.SPX> shed 5.74 points, or 0.53 percent, to 1,083.73. The Nasdaq Composite Index <.IXIC> slid 19.36 points, or 0.88 percent, to 2,189.27.
The S&P 500 fell below its 50-day moving average of 1,088, a key technical support level. A break below technical levels could exacerbate a sell-off.
Technicians also are watching to see if the SOX breaks its 324 support level.
This would be very negative for the U.S. broad market and would suggest that a much bigger decline is coming, John J. Kosar, director of research at Asbury Research LLC in Chicago, said in a note.
Among other stocks declining, Kohl's Corp
Meanwhile, General Motors Co
(Reporting by Caroline Valetkevitch; Additional reporting by Angela Moon and Rodrigo Campos; Editing by Jan Paschal)