US investors lose enthusiasm

Investor uncertainty pushed stocks lower on Wall Street today in volatile trading, with networker Cisco Systems’ tentative spending outlook hitting technology shares hard.

Wall Street continued the week’s sideways trading, with blue chip shares showing greater strength than more speculative tech and small-cap stocks as cautious investors move to defensive positions.

As the earnings season winds down, some analysts say the market may be headed for a pause, but despite today’s tech selling, investors do not seem ready to pull out in large numbers yet.

“Today, there’s a lot of indecision. This market is as wimpy as I’ve seen in a long time,” said Brian Belski, market strategist at Piper Jaffray. “But there’s a lot of pent up buying demand, lots of inflow into the market, so I tend to think it’s too early to jump on the correction bandwagon.”

The Dow Jones industrial average finished down 34.44, or 0.3%, at 10,470.74.

The broader gauges were also lower. The Nasdaq tumbled 52.07, or 2.5%, to 2,014.14. The Standard & Poor’s 500 index lost 9.51, or 0.8%, to close at 1,126.52.

Corporate earnings have beaten forecasts overall and economic numbers have been consistently strong. A better-than-expected rise in factory orders for December, reported today by the Commerce Department, offered further evidence that the US recovery remains on track.

Cisco Systems dropped $2.33, or 8.8%, to $24.08, although its earnings beat Wall Street’s expectations. Industry observers had watched the results for signs that businesses were investing more in tech, but the networking equipment company indicated any rebound in spending remains uncertain.

Another significant decliner in the Nasdaq was Ciena Corp, which plummeted $1.30, or 18%, to $5.99, after the telecommunications equipment maker warned investors its first-quarter revenues were likely to drop below forecasts. The company blamed the shortfall on the timing of a single order.

Tech stocks on the Dow also fell. Hewlett-Packard skidded 72 cents to $23.19, while Intel dropped $1.27 to $30.09 and Microsoft fell 26 cents to $27.03.

McDonald’s rose 26 cents to $26.41 after Smith Barney raised its price target for the fast-food retailer, citing a franchisee survey that points to strong sales momentum.

General Mills lost 74 cents to $44.91 a day after the cereal maker disclosed that federal investigators had made a preliminary decision to recommend civil action against it over its sales practices. Food industry experts say the case probably centres around incentives and fees paid to retailers for prominent product placement on store shelves.

China Life Insurance was down $2.13, or 7.4%, at $26.67, after it failed to release details about a recent investigation by China’s National Audit Office. The company, which controls nearly half of mainland China’s insurance market, debuted on the global market in December with a $3bn initial public offering.

Decliners outnumbered advancers by more than 3 to 1 on the New York Stock Exchange. Volume was 1.62 billion shares, compared with 1.48 billion shares traded at the same point on Tuesday.

The Russell 2000 index, which tracks smaller company stocks, was down 15.12, or 2.6%, at 564.03.