NEW YORK >> A dim technology forecast from Cisco Systems sent stocks tumbling today, as investors upbeat after four weeks of gains got a sobering reminder of the economy's uncertain outlook. The Dow Jones industrials fell more than 180 points. Stocks fall
on profit-takingBy Hope Yen
Associated Press
Analysts said many investors cashed in profits on fears that Wall Street's recent rally, which was surprisingly strong, might have been too much, too soon.
"There's still a paranoia about when the economy is going to get better," said Philip S. Dow, managing director of equity strategy at Dain Rauscher Wessels. "With third-quarter earnings behind us, with the election behind us, you wonder where the cavalry is going to come from."
"But my sense is this is a natural pause after a big rally," he said.
Declining issues outnumbered advancers more than 9 to 4 on the New York Stock Exchange. Volume was moderate. The Dow dropped 184.77, or 2.1 percent, to close at 8,586.24.
The broader market also finished sharply lower. The Nasdaq composite index fell 42.28, or 3 percent, to 1,376.71. The Standard & Poor's 500 index declined 21.11, or 2.3 percent, to 902.65. The Russell 2000 index, which tracks smaller company stocks, fell 9.58, or 2.4 percent, to 383.15.
The price of the Treasury's 10-year note was unchanged today, but its yield fell to 3.86 percent from 4.03 percent yesterday. Two-year Treasury note prices also were unchanged, but yield fell to 1.82 percent from 1.83 percent yesterday.
Cisco fell 61 cents to $12.35 after the computer network maker reported fiscal first-quarter earnings that beat expectations, but also predicted a weaker second quarter due to soft sales. The news hurt other tech companies, including IBM, which dropped $2.59 to $78.95.
"The Cisco news has taken a little bit of the luster off the rose," said Todd Clark, head of listed equity trading at Wells Fargo Securities. "The bigger picture is we had a tremendous run ... and it was a logical spot to look for a pullback. This gave investors the excuse they needed."
Two encouraging economic reports released today appeared to have little effect on trading.
The Labor Department reported that productivity grew at a brisk annual rate of 4 percent in the third quarter and new claims for unemployment benefits dropped last week by a seasonally adjusted 20,000 to 390,000, the lowest level since early October, the department said in a separate report.
Investors also appeared to shrug off monthly sales figures showing many of the nation's largest retailers had gains and several exceeded Wall Street's expectations.
Yahoo! dropped $1.78 to $15.60 after Prudential Securities cut the Internet company's stock rating from buy to hold.
Costco Wholesale fell $1.64 to $32.07 after the discount warehouse chain cut its first-quarter outlook, citing tobacco price increases.
Overseas, Japan's Nikkei stock average finished 0.4 percent lower. In Europe, Germany's DAX index was down 4.3 percent, France's CAC-40 declined 3.2 percent, and Britain's FTSE 100 dropped 0.6 percent.