Cisco's Disappointing Outlook Weighs on Stocks

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 [e-mail] and Caitlin Ostroff at [e-mail]

(END) Dow Jones Newswires

November 14, 2019 11:09 ET (16:09 GMT)

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