NEW YORK (Reuters) – Stocks declined on Thursday, led by technology losses as Cisco Systems Inc’s weak outlook fueled worries that economic softness will hurt corporate profits.

Cisco (CSCO.O) lost 16 percent to $20.57 after the Internet network product provider’s chief executive cautioned about “short-term challenges” in Europe and U.S. public-sector spending. Cisco forecast revenue and earnings below estimates late Wednesday.

Analysts saw the outlook as worrisome, particularly since profit growth for technology companies has outperformed the broader S&P 500 this earnings period and since Cisco’s report came about a month after other top tech names reported.

“This makes me incrementally concerned about the GDP growth outlook for the next year,” said Steve Neimeth, portfolio manager for SunAmerica Asset Management in Jersey City, New Jersey, which owns Cisco shares.

It also raises questions about the impact on profits from state and federal government cutbacks, he said, asking: “Is Cisco the canary in the coal mine?”

Cisco stock is on course to suffer its worst one-day percentage drop since July 14, 1994, when it slid 17.71 percent, according to Thomson Reuters Datastream.

Cisco’s warning dragged down shares of other tech heavyweights. Microsoft Corp (MSFT.O) was down 1.3 percent at $26.60, and Hewlett-Packard Co (HPQ.N) dropped 3 percent at $42.85.

Cisco’s market value was reduced by about $21 billion in early trading, according to S&P.

By the end of the session, Cisco stock could wind up suffering its biggest one-day dollar loss ever, according to Howard Silverblatt, an analyst at Standard & Poor’s.

By midafternoon, about 450 million shares had traded, making this one of the 10 busiest days ever for the stock.

The Dow Jones industrial average (.DJI) was down 61.19 points, or 0.54 percent, at 11,295.85. The Standard & Poor’s 500 Index (.SPX) was down 4.12 points, or 0.34 percent, at 1,214.59. The Nasdaq Composite Index (.IXIC) was down 20.60 points, or 0.80 percent, at 2,558.18.

The disappointing outlook came as the market’s recent rally lost steam. Tech shares have led that rally, with the S&P information tech index (.GSPT) up about 23 percent from the end of August through Wednesday’s close, compared with the S&P 500′s gain of about 16 percent in that same period.

The day’s decline has helped the market recover from an overbought condition, with the smoothed relative strength index (RSI) at about 63, off a recent high of 78.

Technical indicators showed that Cisco’s stock was oversold, but the moving average convergence-divergence (MACD) triggered a “sell” signal. Momentum dropped to its lowest in 2-1/2 months.

Thursday’s tumble took Cisco’s stock below its 14-, 50- and 200-day moving averages. The stock stayed above the year low, which could provide some technical support. On a closing basis, the year low stands at $19.99 on August 31.

The decline in Cisco erased much of the stock’s run-up as part of wider market rally that started in September.

Volume in Cisco’s shares soared in early trading. In the first half hour, nearly 200 million shares changed hands.

Cisco’s and the broader tech sector’s selloff pointed to the need for diversification, said Kevin Mahn, chief investment officer at Hennion & Walsh Asset Management in Parsippany, New Jersey, which has about $300 million in assets under management.

“Investors should look to build more diversification in their portfolios, relying not just on normal bellwethers like tech,” Mahn said. “I’d recommend people look to places like small-caps, emerging markets and different kinds of bonds.”

(Reporting by Caroline Valetkevitch; Additional reporting by Rodrigo Campos and Ryan Vlastelica; Editing by Jan Paschal and Jeffrey Benkoe)

LONDON – Investors breathed a sigh of relief that bond auctions in Ireland, Spain and Greece went smoothly and sent European stocks and the euro higher Tuesday, while U.S. markets waited for the latest policy statement from the Federal Reserve.

In Europe, the FTSE 100 index of leading British shares was up 25.75 points, or 0.5 percent, at 5,628.29 while Germany’s DAX rose 21.16 points, or 0.3 percent, to 6,315.74. The CAC-40 in France was 23.03 points, or 0.6 percent, higher at 3,811.04.

In the U.S., the Dow Jones industrial average was down 10.56 points, or 0.1 percent, at 10,743.06 soon after the open while the broader Standard & Poor’s 500 index fell 1.27 point, or 0.1 percent, to 1,141.44.

Ahead of the Fed statement — due at 2:15 p.m. EDT (1815 GMT) — the focus of attention was on a trio of bond auctions, which, had they failed, threatened to reignite the government debt crisis that engulfed the eurozone earlier this year and raise questions about the long-term viability of the euro currency itself.

Relief the auctions went smoothly bolstered stocks in Europe.

In particular, investors were relieved that Ireland tapped the markets for euro1.5 billion by selling four-year and eight-year government bonds, indicating that demand remained firm despite recent concerns that the Irish economy was falling off a cliff as it grapples with sky-high debt levels and a bailed-out banking system.

The amount raised was at the top end of market expectations, and eased fears Ireland’s government was losing credibility following rumors last week — since denied — that it would need the help of the International Monetary Fund.

However, the Irish government had to offer higher interest rates than its previous equivalent auction to attract investors — 4.76 percent for the four-year offering and 6.02 percent for the eight-year bond.

“The Irish government bond auction went well considering the circumstances,” said David Buik, markets analyst at BGC Partners.

Fears of an imminent explosion in the debt crisis were further eased by the news that bailed-out Greece managed to raise euro390 million in three-month bills at a slightly lower interest rate than it had to in its previous auction.

Spain also garnered euro7 billion — the top end of expectations — via the issue of 12- and 18-month bills, but had to pay a moderately higher interest rate to get investors to buy.

It’s been a while since European bond auctions attracted so much interest in the markets.

Concerns over the summer were soothed by the euro110 billion euro bailout of Greece from the country’s 15 partners in the eurozone and the International Monetary Fund, and a near $1 trillion rescue package to support other eurozone economies failed to dampen concerns about Europe’s shaky finances.

However, many analysts have argued that the respite would be temporary given the level of debt in a number of European countries, the rates they are having to pay to attract investors and the savage austerity measures that are being implemented — the impact of the austerity will merely weaken economies and raise deficits and debt, undermining the whole exercise, they argue.

“The endgame to the eurozone debt crisis is some form of debt restructuring, which implies an effective default,” said Neil MacKinnon, global macro strategist at VTB Capital.

Now that the bond auctions have come and gone, investors are focusing in on the policy statement from the Fed.

Investors will be looking to see if the Fed hints at whether it is moving towards announcing another raft of measures, such as bond purchases, to get the U.S. economy going again — the purpose of this so-called quantitative easing is to lower rates on such debt to stimulate the economy.

Analysts cautioned against expecting anything dramatic from the Fed given a run of strong economic data — last week’s weak consumer confidence survey from the University of Michigan notwithstanding.

News that U.S. housing starts and building permits rose 10.5 percent and 1.8 percent respectively in August had little impact even though they topped forecasts for no change.

“Against the backdrop of looming foreclosures and the overhang of unsold houses, we do not regard today’s data as reason for euphoria,” said Christophe Balz, chief economist at Commerzbank.

The same factors that are dominating stock markets were evident in currency markets too, with the euro benefiting from the successful passage of another batch of bond offerings before the Fed statement.

By mid afternoon London time, the euro was 0.6 percent higher at $1.3141 while the dollar was 0.4 percent lower at 85.34 yen.

Earlier in Asia, Japan’s Nikkei 225 stock average surrendered early gains to close down 0.3 percent at 9,602.11 as the country returned from a Monday holiday. Hong Kong’s Hang Seng rose 0.1 percent to 22,002.59 the Shanghai Composite Index inched up 0.1 percent to 2,591.55. However, Australia’s S&P/ASX 200 dropped 0.3 percent to 4,617.50.

Benchmark crude for October delivery was down 50 cents at $73.36 a barrel in electronic trading on the New York Mercantile Exchange.

NEW YORK – Stocks are reversing course after a surprise drop in consumer sentiment.

Major indexes gave up early morning gains Friday and are now fluctuating in a narrow range after a preliminary reading on September consumer sentiment fell unexpectedly. The University of Michigan/Reuters sentiment index has fallen to 66.6 when economists were expecting it to rise to 70.

Stocks had regained some momentum earlier in the day because of upbeat earnings from Oracle and Research in Motion.

The Dow Jones industrial average is down 10, or 0.1 percent, at 10,585. The S&P 500 is up less than 1 at 1,125, while the Nasdaq composite is up 3, or 0.1 percent, at 2,306.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — New signs of strength in the technology sector drove stocks higher Friday.

Strong profits reports from BlackBerry maker Research in Motion and software company Oracle are encouraging because it means companies are investing in new technology, often considered a leading indicator for an improving economy. Research in Motion also tried to quell unease surrounding ongoing disputes about data security.

The Dow Jones industrial average rose about 50 points in early morning trading. The Standard & Poor’s 500 index, often used as a benchmark by professional investors, rose 0.6 percent and is approaching the high end of its recent trading range.

Oracle and Research in Motion’s results have helped restart a September rally that has lost some momentum in recent days. September is historically a poor month for stock returns, but this year so far major indexes have climbed sharply as many economic indicators have topped modest growth forecasts.

A report later Friday on consumer sentiment could provide an additional lift to stocks. As reports have indicated continued growth in recent weeks, traders have become more confident the economy will not fall back into a recession.

A preliminary reading of the University of Michigan/Reuters sentiment index likely climbed to 70 from 68.9 last month. Rising consumer confidence would bode well for the market because it could lead to a jump in retail sales, a primary driver of the economy.

The Dow jumped 50.86, or 0.5 percent, to 10,646.07 in early morning trading.

The S&P 500 rose 6.39, or 0.6 percent, to 1,131.05, while the tech-heavy Nasdaq composite index rose 16.33, or 0.7 percent, to 2,319.58.

Traders will be closely watching the 1,131 level on the S&P 500 because that is the high end of its recent trading range. For traders that make moves based on technical indicators breaking out above that level would indicate the market is ready to extend its rally and could trigger a rush of buying. Being unable to move significantly above could lead to a sell-off. Many automated trading platforms have buy and sell orders set around such indicators.

NEW YORK (AFP) – US stocks plunged Friday after sagging consumer confidence and a mixed batch of second-quarter earnings revived fears about the health of the economic recovery.

The Dow Jones Industrial Average tumbled 261.41 points (2.52 percent) to finish at 10,097.90.

All 30 of the Dow’s blue-chip stocks closed in the red.

The tech-heavy Nasdaq composite index dropped 70.03 points (3.11 percent) to 2,179.05 while the broad-market S&P 500 index shed 31.60 points (2.88 percent) at 1,064.88.

Stocks were under selling pressure from the opening bell as investors weighed a conflicting batch of financial results from major companies including Google, Bank of America, Citigroup and General Electric.

Adding to economic recovery concerns was the University of Michigan’s consumer sentiment index, which dropped almost 10 points — far steeper than forecast — to 66.5 in July, the lowest reading since August 2009.

“Most of the day’s mayhem can be traced back to a massive plunge in consumer confidence,” said Elizabeth Harrow at Schaeffer’s Investment Research.

The market shrugged off a government report showing inflation remained tame, in line with expectations. The consumer price index fell for the third consecutive month in June, by 0.1 percent, led by lower gasoline prices.

Bank of America plunged 9.16 percent to 13.98 dollars. The largest US bank by assets revealed higher-than-expected profit but a sharp 11 percent drop in revenue.

Better-than-forecast profits but disappointing revenues also weighed on Citigroup, down 6.25 percent at 3.90 dollars, and General Electric, off 4.59 percent at 14.55 dollars.

Internet giant Google gave up 6.97 percent at 459.60 dollars after reporting net profit rose 24 percent from a year ago to 1.84 billion dollars, short of market expectations.

Apple slipped 0.62 percent to 249.90 dollars after chief executive Steve Jobs offered free cases to fix reception problems with the new iPhone 4.

Toy maker Mattel plunged 9.52 percent to 20.81 dollars after doubling profit from a year ago that nevertheless was slightly below expectations.

Bucking the rout was Goldman Sachs, up 0.65 percent to 146.17 dollars after agreeing to pay a record 550 million dollars to settle government fraud charges.

Lockheed Martin dropped 2.66 percent to 73.93 dollars. Canada on Friday said it was buying 65 Lockheed Martin F-35 stealth fighter jets for nine billion Canadian dollars (8.5 billion US).

The steep losses came after US stocks fell Thursday, snapping a seven-day winning streak, leaving the Dow down a scant 0.07 percent.

Bonds rose. The yield on the 10-year US Treasury bond fell to 2.939 percent from 2.978 percent on Thursday while that on the 30-year bond dropped to 3.949 percent from 3.968 percent.

NEW YORK (Reuters) – Dismal consumer sentiment data and anemic revenues from GE and two big banks slammed U.S. stocks on Friday, driving down major indexes more than 2 percent.

The slide in the S&P 500 was a decisive break of an 8 percent rise over the last two weeks as investors lost hope that strong earnings could overcome doubts about the economic outlook.

“Economic recoveries rarely go smoothly,” said Gail Dudack, chief investment strategist at Dudack Research Group in New York.

“They’re very sensitive to anything that helps or hurts confidence, on the corporate side and the consumer side.”

General Electric Co (GE.N), Bank of America Corp (BAC.N) and Citigroup Inc (C.N) joined the list of major companies that beat Wall Street’s expectations, but investors unloaded some shares of all three after the companies reported a drop in quarterly revenues.

“The next step for earnings has to be top line or revenues, and revenues slowed down along with the consumer and the economy in the second quarter,” Dudack said.

Bank of America, the biggest U.S. bank, slid more than 9 percent and the S&P financial index (.GSPF) dropped 4.4 percent as investors fretted about how banks will make money going forward.

The Dow Jones industrial average (.DJI) dropped 261.41 points, or 2.52 percent, to 10,097.90. The Standard & Poor’s 500 Index (.SPX) slid 31.60 points, or 2.88 percent, to 1,064.88. The Nasdaq Composite Index (.IXIC) lost 70.03 points, or 3.11 percent, to 2,179.05.

Volume picked up late in the day after waning since the beginning of July.

For the week, the Dow fell 1 percent, while the S&P 500 dropped 1.2 percent and the Nasdaq gave up 0.8 percent.

During Friday’s session, GE’s stock fell 4.6 percent to $14.55, while Citigroup lost 6.3 percent to $3.90. Bank of America was down 9.2 percent at $13.98.

Weak energy costs pushed consumer prices down for a third straight month in June, U.S. government data showed. That report and the Thomson Reuters/University of Michigan data were the latest in a string of economic indicators showing the pace of the recovery is slowing.

GOOGLE AND GILEAD STUMBLE

Google Inc (GOOG.O) shares also sagged after the company missed profit expectations for the first time in two years. The stock was down 7 percent at $459.61.

Among the Nasdaq’s other leading decliners, Gilead Sciences Inc (GILD.O) tumbled 8.5 percent to $31.94 after Jefferies cut its price target on the stock to $38.00 from $48.00.

The Thomson Reuters/University of Michigan survey of consumers showed U.S. consumer sentiment fell far more than expected to 66.5 in a preliminary July reading, down sharply from 76.0, June’s final number. Earlier, the U.S. Labor Department reported the U.S. Consumer Price Index dipped 0.1 percent in June, which was weaker than the forecast for no change.

The S&P’s consumer discretionary sector was among the biggest losers; the sector’s index (.GSPD) fell 3.5 percent.

About 9.35 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, just below last year’s estimated daily average of 9.65 billion.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of 4 to 1, while on the Nasdaq, more than seven stocks fell for every one that rose.

(Editing by Jan Paschal)

NEW YORK – Investors are finding disappointment everywhere and taking out their frustration on stocks.

Stocks slumped Friday after banks’ second-quarter earnings fell short of expectations and a new survey found that consumers are becoming more pessimistic. The Dow Jones industrial average lost 261 points, and all the major market indexes dropped more than 2.5 percent. Interest rates fell in the Treasury market as investors once again sought the safety of government securities.

The market fell at the opening after Citigroup Inc. and Bank of America Corp. released earnings. The two banks, like JPMorgan Chase & Co. a day earlier, reported higher earnings as losses from failed loans fell. But they are also seeing lower trading revenue because of the stock market’s plunge this spring. The drop in revenue raised questions about how banks will be able to make big profits if trading is curtailed by new federal regulations.

Stocks fell further after a twice-monthly survey from the University of Michigan and Reuters found that consumers’ gloom is increasing. An index of consumer sentiment compiled from the survey fell to 66.5 in early July from 76. That was a bigger drop than expected.

“It’s mostly about the poor consumer confidence numbers,” said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. “The possibility of a double dip also starts to come to mind” for investors, he said, referring to a phrase that describes the economy falling back into recession.

The unexpectedly low reading on consumer confidence “spooks people and reinforces fears that the economy is slowing too much too fast,” said Scott Marcouiller, chief technical market strategist at Wells Fargo Advisors. He noted that stocks had just enjoyed a seven-day winning streak, which makes them vulnerable to a big drop. And light volume, typical for a summer Friday, exacerbated the losses.

The market’s retreat following a big gain fit with its pattern since late April, when the major indexes hit 2010 highs and then tumbled amid a variety of economic worries. But it wasn’t just the economic data that set investors off Friday.

“You get a few bad earnings numbers and it’s a lot of excuses to take profits if you got them,” Marcouiller said.

Citigroup’s shares were off 6.3 percent while Bank of America was off 9.2 percent. General Electric Co. fell 4.6 percent beating despite delivering stronger earnings and a healthy outlook. The company also reported a drop in revenue.

Stocks had struggled to a mixed finish Thursday after being down for much of the day on disappointing regional manufacturing reports for the Northeast. Much of the deficit was erased late in the day as news began to circulate that Goldman Sachs Group Inc. had settled civil fraud charges with the government over its dealings with subprime mortgage securities.

However, while investors were relieved that Goldman was putting the case behind it, they were again confronted Friday by larger ongoing worries: the economy and the future of the banking industry now that Congress has approved the banking industry overhaul bill.

The Dow fell 261.41, or 2.5 percent, to 10,097.90. The Standard & Poor’s 500 index fell 31.60, or 2.9 percent, to 1,064.88. The Nasdaq composite index fell 70.03, or 3.1 percent, to 2,179.05.

For the week, the Dow is down 1 percent, the S&P 500 is down 1.2 percent, and the Nasdaq is down 0.8 percent.

About four stocks fell for every one that rose on the New York Stock Exchange, where consolidated volume came to 5.4 billion shares, up from Thursday’s 4.6 billion.

Bond prices rose in what’s known as a flight to safety. That sent their yields lower. The yield on the benchmark 10-year Treasury note, which helps set interest rates on mortgages and other kinds of loans, fell to 2.93 percent from 3.00 percent late Thursday.

The formal announcement of Goldman’s $550 million settlement came after the stock market closed on Thursday. Goldman was the only major financial company to show a gain Friday. It was up 95 cents, or 0.7 percent, at $146.17.

Bank of America’s stock fell $1.41, or 9.2 percent, to $13.98. Citigroup was off 26 cents, or 6.3 percent, at $3.90. Both companies beat analysts’ expectations. However, the drop in their revenue as a result of the stock market’s slide had investors worried about how banks would make money in the future under new government regulations.

Google Inc. fell $34.41, or 7 percent, to $459.61 after its earnings fell short of analysts’ expectations.

GE lost 70 cents or 4.6 percent to $14.55.

The Dow ended its seven-day winning streak on Thursday. It was down as much as 126 points early in the day, but closed down just 7 as word spread about the Goldman Sachs settlement.

A government report on consumer prices for June was mainly in line with analysts’ expectations. The Consumer Price Index dipped 0.1 percent last month, largely due to lower energy bills.

The euro climbed above $1.29 as it recovers following a steep plunge earlier this year amid fears that government debt in many European nations would send the continent back into recession.

Overseas, Britain’s FTSE 100 fell 0.9 percent, Germany’s DAX index fell 1.8 percent, and France’s CAC-40 fell 2.1 percent. Japan’s Nikkei stock average tumbled 2.9 percent.

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Business Writers Dave Carpenter in Chicago and Joel Schectman in New York contributed to this report.

NEW YORK – Stocks slumped Friday after earnings reports from two big banks disappointed investors and a survey showed that consumers are becoming more pessimistic.

The Dow Jones industrial average fell more than 190 points, and other major market indexes were also down more than 1 percent. Interest rates fell in the Treasury market as investors once again sought out the safety of government securities.

The market fell at the opening after Citigroup Inc. and Bank of America Corp. released earnings. The two banks, like JPMorgan Chase & Co. a day earlier, reported higher earnings as losses from failed loans fell. But they are also seeing lower trading revenues because of the stock market’s plunge this spring.

Stocks fell further after a twice-monthly survey from the University of Michigan and Reuters found that consumers’ gloom is increasing. An index of consumer sentiment compiled from the survey fell to 66.5 in early July from 76. That was a bigger drop than expected.

“It’s mostly about the poor consumer confidence numbers,” said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. “The possibility of a double dip also starts to come to mind” for investors, he said, referring to a phrase that describes the economy falling back into recession.

Typically low summer volume Friday intensified the market’s losses, he said.

“We’re going to see more volatility, days when there are 2 percent swings,” Conroy said. “The economy is OK. But the one concerning part of it is jobs — that’s the reason why you have poor consumer confidence.”

Citigroup’s shares were off nearly 4 percent while Bank of America was off more than 8 percent. General Electric Co. fell 3.7 percent despite delivering stronger earnings and a healthy outlook before the market opened.

Stocks had struggled to a mixed finish Thursday after being down for much of the day on disappointing regional manufacturing reports for the Northeast. Much of the deficit was erased late in the day as news began to circulate that Goldman Sachs Group Inc. had settled civil fraud charges with the government over its dealings with subprime mortgage securities.

However, while investors were relieved that Goldman was putting the case behind it, they were again confronted Friday by larger ongoing worries: the economy and the future of the banking industry now that Congress has approved the banking industry overhaul bill.

In midday trading, the Dow Jones industrial average was down 194.21, or 1.9 percent, at 10,165.33. The Standard & Poor’s 500 index fell 22.84, or 2.1 percent, to 1,073.64. The Nasdaq composite index fell 48.40, or 2.2 percent, to 2,200.68

About fie stocks fell for every one that rose on the New York Stock Exchange, where volume came to 620 million shares.

Bond prices rose in what’s known as a flight to safety. That sent their yields lower. The yield on the benchmark 10-year Treasury note, which helps set interest rates on mortgages and other kinds of loans, fell to 2.93 percent from 3.00 percent late Thursday.

The formal announcement of Goldman’s $550 million settlement came after the stock market closed on Thursday. Goldman was the only major financial company to show a gain Friday. It was up $3.75, or 2.6 percent, at $148.97.

Bank of America’s stock fell $1.26, or 8.2 percent, to $14.13. Citigroup was off 16 cents, or 3.9 percent, at $4. Both companies beat analysts’ expectations. However, the drop in their revenue as a result of the stock market’s slide had investors worried about how banks would make money in the future under new government regulations.

Google Inc. fell $26.02, or 5.3 percent, to $468 after its earnings fell short of analysts’ expectations.

GE lost 56 cents or 3.7 percent to $14.69.

The Dow ended a seven-day winning streak on Thursday. The Dow was down as much as 126 points early in the day, but closed down just 7 as word spread about the Goldman Sachs settlement.

A government report on consumer prices for June was mainly in line with analysts’ expectations. The Consumer Price Index dipped 0.1 percent last month, largely due to lower energy bills.

The euro climbed above $1.29 as it recovers following a steep plunge earlier this year amid fears that government debt in many European nations would send the continent back into recession.

Overseas, Britain’s FTSE 100 fell 0.9 percent, Germany’s DAX index fell 1.8 percent, and France’s CAC-40 fell 2.1 percent. Japan’s Nikkei stock average tumbled 2.9 percent.

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Business Writer Dave Carpenter contributed to this report from Chicago.

NEW YORK (Reuters) –
Stocks trimmed losses to trade around breakeven on Friday after a report showed consumer sentiment rose in June to its highest since January 2008.

The Dow Jones industrial average (.DJI) dropped 8.46 points, or 0.08 percent, to 10,144.34. The Standard & Poor’s 500 Index (.SPX) gained 0.82 points, or 0.08 percent, to 1,074.51. The Nasdaq Composite Index (.IXIC) dropped 3.51 points, or 0.16 percent, to 2,213.91.

(Reporting by Edward Krudy; editing by Jeffrey Benkoe)