Cisco's Disappointing Outlook Weighs on Stocks
November 14 2019 - 11:24AM
Dow Jones News
By Michael Wursthorn and Caitlin Ostroff
Major U.S. stock indexes struggled to gain traction Thursday
after a disappointing forecast from Cisco Systems pulled shares of
the networking giant sharply lower.
The Dow Jones Industrial Average was recently down 18 points, or
less than 0.1%, to 27766 as the blue-chip index bobbed around the
flat line. The S&P 500 also hovered around its previous close,
while the Nasdaq Composite fell 0.2%.
All three indexes were hampered by a steep pullback in shares of
Cisco. The stock fell 7.7% after the company said late Wednesday
that it expects to book its first quarterly revenue decline in more
than two years. The networking giant, considered a proxy for
corporate high-tech hardware demand, blamed lighter customer
spending for the lackluster outlook.
Cisco's move acted as a significant drag on the price-weighted
Dow industrials, shaving roughly 25 points from the index. It also
fell more than any other stock in the S&P 500.
"We're painfully aware of the situation" with Cisco, said Mike
Bailey, director of research at FBB Capital Partners. Mr. Bailey
said despite Cisco's bellwether status, the company's problems
appear to be restricted to itself.
"We own a bunch of tech companies and we're not seeing a broader
theme of pressure on business spending," said Mr. Bailey.
Technology stocks in the S&P 500 fell 0.4%, as shares of
several other communications equipment companies declined along
with some semiconductor stocks.
Health-care stocks also fell, adding to the pressure on major
indexes. Several biotechnology stocks led the declines, including
Biogen, which fell 3%.
Investors also contended with signs of ongoing friction between
the U.S. and China, as the two sides haggle over agriculture
purchases, The Wall Street Journal reported Wednesday.
Analysts have routinely said that investors need clear signs of
a trade truce between the world's two largest economies for stocks
to move significantly higher.
Elsewhere, the Stoxx Europe 600 fell 0.2%, led by declines in
auto makers.
Asian stocks, meanwhile, were mixed, with the Shanghai Composite
up 0.2%, while Hong Kong's Hang Seng waned 0.9% as antigovernment
protests snarled the city. Clashes between police and protesters
have intensified in recent days.
Write to Michael Wursthorn at Michael.Wursthorn@wsj.com and
Caitlin Ostroff at caitlin.ostroff@wsj.com
(END) Dow Jones Newswires
November 14, 2019 11:09 ET (16:09 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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