Disappointing tech forecasts drag stocks lower
NEW YORK -- The stock market resumed its slide Thursday as disappointing forecasts from technology companies brought new concerns about the economy.
A weaker outlook from technology maker Qualcomm Inc. dragged the Nasdaq composite index lower. Drops in Motorola Inc. and Apple Inc. also hurt tech stocks. The Dow Jones industrial average fell 95 points after falling five of the last eight days.
The market also fell in response to a report from Standard & Poor's that said it no longer considers Britain's banking system among the "most stable and low-risk." The report added to concern about rising debt levels other countries, such as Greece, and drove the dollar higher as investors sought safety. That sent some commodities prices lower, hurting materials stocks.
The tech forecasts and debt worries were yet more concerns for investors who have been focused on politics, not the economy. Stocks have been sliding as concern builds that a fragile economic recovery could be derailed by missteps in Washington. The questions have some analysts saying that a 10-month surge of 62.2 percent in the Standard & Poor's 500 index isn't warranted.
President Barack Obama's plan to overhaul banking regulations and restrict trading at large financial institutions spooked the market during the past week. The possibility Federal Reserve Board chairman Ben Bernanke wouldn't be confirmed for a second term also had investors on edge, though those worries have subsided as the vote neared.
"Our full-contact politics is really beginning to affect the markets as it's migrating into subjects that investors care deeply about like who is our Fed chairman going to be," said Lawrence Creatura, portfolio manager at Federated Clover Investment Advisors. "That wasn't uncertain two weeks ago. Now it is."
The Senate scheduled a vote Thursday to determine whether Bernanke can win approval from at least 60 senators to defeat a filibuster aimed at preventing his reappointment. His term ends Sunday. Senate leaders from both parties said he would be reappointed.
During his State of the Union address Wednesday evening, Obama avoided talking about the banking overhaul plan. Uncertainty over details of how that plan might be enacted are adding to investors' uncertainty.
Concerns about economy are also creeping back to the forefront. The Fed said Wednesday it would keep interest rates at historic lows and that the economy was showing signs of improvement. That helped stocks reverse a slide to end higher.
The enthusiasm faded Thursday after the Labor Department said weekly jobless claims fell by less than expected last week and the Commerce Department reported durable goods orders didn't rise as fast as anticipated last month. The reports provided reminders that the economic recovery is likely to be slow.
In late afternoon trading, the Dow fell 94.77, or 0.9 percent, to 10,141.39. The drop put the psychological barrier of 10,000 back in investors' sights. The Dow, which had been down as much as 181 points, hasn't traded below 10,000 since Nov. 6.
The Standard & Poor's 500 index fell 8.32, or 0.8 percent, to 1,089.18, while the Nasdaq fell 32.01, or 1.4 percent, to 2,189.40.
The recent drop in stocks is particularly worrisome for some analysts because the last trading day of January arrives Friday. Traders often note that as goes January, so goes the year. The so-called January barometer holds that the performance of the S&P 500 index in January is a predictor of how stocks will end the year. There have been only five major errors since 1950, for an accuracy rate of 91.5 percent, according to the Stock Trader's Almanac.
The S&P 500 index was down 1.6 percent for January before Thursday's drop. It was down 5.8 percent since closing at a 15-month high last week, still short of a correction, which is generally defined as a drop of at least 10 percent.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, was unchanged at 3.66 percent late Wednesday.
The dollar rose against other major currencies, while gold fell.
Crude oil rose 16 cents to $73.83 per barrel on the New York Mercantile Exchange.
Tech shares slid after Qualcomm, which makes chips and other technologies used in cell phones, fell $6.78, or 14.4 percent, to $40.42 after it said it expects a "subdued" rebound in the economy and reduced its full-year sales forecast.
Motorola fell 90 cents, or 12.2 percent, to $6.50 after its profit forecast fell short of expectations.
Apple Inc., whose stock has more than doubled in the past year, fell $7.08, or 3.4 percent, to $200.80 after announcing it would sell a tablet-style computer that looks like a large iPhone. The stock closed higher Wednesday after making the announcement.
In economic news, new requests for unemployment benefits fell modestly, dropping to 470,000 last week. Economists polled by Thomson Reuters had been expecting a bigger drop to 450,000 new unemployment filings.
Orders to U.S. factories for big-ticket manufactured goods rose less than expected in December, increasing just 0.3 percent. Economists had been expecting a 2 percent increase in orders.
For all of 2009, durable goods orders -- items expected to last at least three years -- tumbled 20.2 percent. It was the largest drop on records that go back to 1992.
On Friday, the government releases its initial reading on fourth-quarter gross domestic product. The GDP number, which measures the entire country's economic output, likely rose at an annualized rate of 4.5 percent during the final three months of 2009.
Three stocks fell for every one that rose on the New York Stock Exchange, where volume came to 733.5 million shares.
The Russell 2000 index of smaller companies fell 9.17, or 1.5 percent, to 609.21.
Britain's FTSE 100 fell 1.4 percent, Germany's DAX index dropped 1.8 percent, and France's CAC-40 fell 1.9 percent. Earlier, Japan's Nikkei stock average rose 1.6 percent.