US stocks were volatile on Thursday after Cisco's downbeat outlook added to concerns about the outlook for corporate tech spending and Wal-Mart's January sales proved a big disappointment. Jobless claims meanwhile declined less than expected.
Less than an hour after the opening bell, the S&P 500 was up 0.2 per cent at 1,328.48, having fallen 0.7 per cent as the market opened. The Dow Jones Industrial Average edged 0.1 per cent higher to 12,209.53 but the Nasdaq Composite fell 0.1 per cent to 2,276.60.
The Nasdaq slipped further into a bear market - a fall of more than 20 per cent from its October peak - after Cisco's sales guidance unsettled investors.
Reporting results after the closing-bell on Wednesday, Cisco said quarterly profit rose 7.2 per cent to $2.06bn, in line with analysts' estimates, but the shares sank 3 per cent to $22.35 on Thursday after it projected 10 per cent sales growth for the fiscal third quarter, below expectations. Several analysts downgraded the stock.
Cisco is considered a bellwether for the tech sector and prompted shares in a range of large-cap technology firms to drop. Last time the company announced results, cautious comments from chief executive John Chambers on the outlook for financial companies' tech spending caused tech shares to plummet.
Some sluggish retail sales figures also weighed on the market although the results were not as bad as some analysts had feared and the S&P retail index climbed 2.3 per cent.
Wal-Mart Stores' same-store sales rose only 0.5 per cent in January, much less than the 2 per cent increase forecast by analysts. In February, Wal-Mart said it expected same-store sales to grow a maximum of 2%. The shares slipped 0.2 per cent to $48.75.
However, department store operator JC Penney helped sentiment improve after same-store sales declined less than forecast and it said fourth quarter earnings would be at the high end of its forecast range. The shares surged 8.3 per cent to $47.40.
Elsewhere, Upmarket retailer Nordstrom, down 1.6 per cent to $35.70, reported a 6.6 per cent decline in same-store sales, while Gap said sales fell 2 per cent and Kohl's same-store sales declined 8.3 per cent. Macy's helped reverse earlier gains on Wednesday when it said January same-store sales fell 7.1 per cent.
In economic news, weekly jobless claims fell 22,000 to 356,000 but the reading was still far higher than many analysts had predicted. A sharp spike last week to 375,000, the highest reading in more than two years, had been dismissed by some economists as an anomaly. This time round the market expected a figure of around 340,000.
The four-week moving average of first time claims rose 8,500 to 335,000. Meanwhile, the number of people on long-term unemployment benefit hit a two-year high.
"On balance, initial jobless claims have drifted higher, although at this point they remain below levels typically associated with outright recession," economists at Bear Stearns, said.
Meanwhile, pending home sales fell a weaker-than-expected 1.5 per cent in December according to the National Association of Realtors, and were down 24.2 per cent from the previous year.
DR Horton, up 0.2 per cent at $14.85, posted a narrower-than-expected quarterly loss. Still, the company posted a loss of $128.8m compared with a profit of $109.7m last year.
In other earning news Pepsico said fourth quarter profit fell 30 per cent to $1.26bn from a year ago, when results were improved by a tax benefit. Revenues rose 17 per cent to $12.35bn. The shares rose 3.7 per cent at $69.26.
Rating agency Moody's said fourth quarter earnings fell 54 per cent to $127.3m as revenues from structured finance and bond sale ratings slumped. However the result was slightly better than expected and the stock surged 7.1 per cent to $35.90.
Also in the financial sector Wachovia, up 0.3 per cent to $34.71, sold $3.5bn of preferred stockbn as it seeks to repair its capital position.
Bond prices pared earlier losses as equities recovered. The yield on the two-year Treasury note was unchanged at 1.93 per cent and the 10-year Treasury note rose a fraction to to 3.62 per cent
European stocks also reversed some of their earlier falls triggered after the ECB kept interest rates on hold. The FTSE Eurofirst 300 index gave up 1.3 per cent while the FTSE 100 sank 1.9 per cent. Asian equity markets closed mainly lower, led by another big fall on the Hang Seng, which sank 5.4 per cent
The dollar rose 0.6 per cent to $1.4338 against the euro after ECB President Jean-Claude Trichet warned of risks to European growth, raising the prospect of future rate cuts. The US currency fell 0.8 per cent against the pound to $1.9464, after the Bank of England cut interest rates by a quarter point.
The price of gold retreated slighty, down 0.1 per cent to $903.90, while crude oil fell 50 cents to $86.65, on fears of weakening US demand.
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