Cisco results weigh on Wall Street

Poor performance drags technology sector lower

Lacklustre quarterly earnings from Cisco Systems dragged on technology stocks but, in the wider markets, a stronger materials sector balanced out losses.

The networking equipment maker tumbled 14.2 per cent to $18.92 after reporting that its profit margin had fallen because of its push into new markets.

In spite of the decline in margins, Cisco’s overall revenue for the second quarter was $10.4bn, or 37 cents a share, above Wall Street’s expectations of $10.23bn, or 39 cents a share.

Cisco has seen an average fall in price of 6.9 per cent in the past four quarters after releasing their earnings results, according to Whisper Numbers, an equity research firm.

The weak results weighed on the technology sector, which was the worst performing in the session. The S&P technology index was down 2 per cent to 473.51.

The S&P 500 closed fractionally up at 1,321.87 as losses among techs were balanced out by stronger materials stocks on reports that Hosni Mubarak, Egyptian president, might step down on Thursday evening.

The S&P materials index was up 0.3 per cent. Among the winners was Cliffs Natural Resources, an iron ore and coalminer, which gained 2 per cent to $88.45.

The Dow Jones Industrial Average was down 0.1 per cent to 12,229.29, ending a eight session winning streak, while the Nasdaq Composite was up 0.1 per cent at 2,790.45.

Confidence on Wall Street was not helped by mixed earnings reports.

PepsiCo reported core earnings per share of $1.05 per diluted share compared with Wall Street’s consensus forecast of $1.04, excluding the impact of its takeover of its two largest bottlers.

Its shares fell 1.6 per cent to $63.36. The news weighed on related stocks. Dr Pepper Snapple was down 3.5 per cent to $33.96 while the S&P beverage sector lost 0.5 per cent.

NYSE Euronext, the world’s largest stock exchange by revenue, softened slightly after jumping 14 per cent in the previous session on news that it was in advanced-stage merger talks with Deutsche Börse, the main German exchange.

NYSE was down 0.8 per cent to $37.80 but the Chicago Board Options Exchange, the US’s primary options-trading venue, rose 5.3 per cent to $26.87.

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