Weak Oracle sales, Cyprus fears weigh on US shares
Stocks fell on Wall Street Thursday as Oracle's weak sales results weighed down big U.S. technology companies. Traders worried about Cyprus running out of time to avoid bankruptcy.
Major indexes followed European markets lower at the open. The Dow Jones industrial average fell as much as 98 points. By mid-day they had pared the losses. Shortly before noon eastern time, the Dow Jones industrial average and the Standard & Poor's 500 index were down about 0.3 percent. The Nasdaq composite index, which is heavily weighted toward tech shares, declined more than 0.6 percent.
All three indexes felt the drag from technology stocks after Oracle reported an unexpected decline in sales in its fiscal third quarter. Oracle was the biggest decliner in the S&P 500 index; Juniper networks also fell steeply. The S&P 500 fell five points to 1,553.
The Dow dropped 36 points to 14,476. Cisco was the Dow's biggest loser, followed by IBM, H-P and Intel.
The Nasdaq fell 20 points to 3,234.
Still, stocks remain near multi-year highs reached in recent weeks after a rally powered by optimism about the U.S. economy and the Federal Reserve's easy-money policies. The Dow is up 3 percent this month. The S&P 500 has gained 2.6 percent in March, and is 11 points from an all-time high set in October 2007.
The recent gains leave the market vulnerable to any negative news about corporate earnings, the economy or Europe, said Uri Landesman, president of the hedge fund Platinum Partners.
"It's priced like everything's going to be wonderful," Landesman said. He said stocks aren't likely to go higher in the next few weeks. They may drop another 3 percent before making another run at the S&P record sometime next month.
U.S. stocks are benefiting from money flowing out of other investments like bonds and overseas stocks, he added.
European markets closed sharply lower Thursday. The main indexes in Paris and Frankfurt fell a percentage point or more on fear that the crisis in Cyprus will intensify. The European Central Bank has threatened to end emergency support of the nation's banks next week unless leaders can secure more funding.
Cyprus must raise about $7.5 billion in the next four days to avoid bankruptcy. Several plans have failed, including a proposal to tax deposits held by the nation's banks. If the Mediterranean banking haven is unable to secure a bailout, its banks will fail and it could be forced to leave the euro currency.
In the U.S., the yield on the 10-year Treasury note fell to 1.94 percent from 1.96 percent earlier as demand increased for ultra-safe investments.
The U.S. job and housing markets continue to improve gradually, according to economic reports released Thursday morning. The Labor Department said the number of people claiming new unemployment benefits last week was roughly flat near a five-year low. Sales of existing homes rose in February to a three-year high, according to the National Association of Realtors.
In the tumbling tech sector, Oracle fell $2.98, or 8 percent, to $32.79. Juniper dropped 56 cents, or 3 percent, to $18.75. Cisco fell 75 cents, or 3 percent, to $20.92. IBM declined $3.45, or 2 percent, to $211.61. And Intel was off 11 cents, less than 1 percent, at $21.07.
Outside of technology, here are some stocks making big moves:
— Struggling drug company AstraZeneca jumped after saying it would cut 2,300 more jobs worldwide and overhaul its research operations. That brings to 11,000 the number of job cuts announced in the past 13 months. Shares rose $1.43, or 3 percent, to $47.61.
— Publisher Scholastic Corp. plunged after shrinking demand for its best-selling "The Hunger Games" books forced it to cut its guidance for the year. The company's fiscal third-quarter loss nearly doubled. Shares fell $4.48, or 14 percent, to $26.59.
— Movado Group Inc. dropped after the luxury watchmaker said its fiscal fourth-quarter net income fell 26 percent. The stock fell $1.96, or 5 percent, to $35.16.