Stocks closed lower on Wall Street Thursday after Oracle's weak sales results weighed down big U.S. technology companies. Traders also worried about Cyprus running out of time to avoid bankruptcy.
Major indexes followed European markets lower at the open and remained solidly negative all day. The Dow Jones industrial average fell as much as 129 points by mid-afternoon before paring the loss to close down 90 points.
All three major indexes felt the drag from technology stocks after Oracle reported an unexpected decline in sales in its fiscal third quarter. Oracle's results have an outsized impact on other technology stocks because it reports earlier than most of its peers.
European markets had closed sharply lower. The main indexes in Paris and Frankfurt fell 1.4 percent and 0.9 percent, respectively, on fear that the crisis in Cyprus will intensify. The European Central Bank has threatened to end emergency support of the nation's banks next week unless leaders can secure more funding.
Cyprus must raise about $7.5 billion in the next four days to avoid bankruptcy. Several plans have failed, including a proposal to tax deposits held by the nation's banks. If the Mediterranean banking haven is unable to secure a bailout, its banks will fail and it could be forced to leave the euro currency. Worries about that scenario first hit stock markets Monday.
"It's amazing how quickly things can turn back to Cyprus and Europe," said Oliver Cross, director of research with Carolinas Investment Consulting LLC in Charlotte, N.C. Cross spent his day focused on headlines from Europe, rather than digesting happier news about hiring and home sales in the U.S.
Oracle was the biggest decliner in the S&P 500 index; Juniper Networks also fell steeply. The S&P 500 closed down 12.91 points, or 0.8 percent, at 1,545.80.
The Dow dropped 90.24 points, or 0.6 percent, to 14,421.49. Cisco was the Dow's biggest loser, followed by H-P. IBM also lost ground.
The Nasdaq, which is weighted heavily toward tech stocks, fell a full percentage point. It closed down 31.59 points at 3,222.60.
Despite being down for the week, the Dow remains near a record high. Its run-up has been powered by optimism about the U.S. economy and the Federal Reserve's easy-money policies. The Dow is up 2.6 percent this month. The S&P 500 has gained 2.1 percent in March, and is 20 points from its own all-time high set in October 2007.
Given the market's recent strength, many analysts have been anticipating a sharp decline at the first sign of bad news — whether from Europe, corporate America or the U.S. economy.
The pullback has not materialized, said Troy Logan, managing director and senior economist at Warren Financial Service in Exton, Penn. He said today's losses could have been much worse.
"We thought Cyprus would be the perfect opportunity for the market to step back, but it looks like the market has shrugged it off," Logan said.
Many of his firm's customers are seeking higher-risk investments with higher potential returns, Logan said — an indication that stocks may keep rising.
The U.S. job and housing markets continue to improve gradually, according to economic reports released Thursday morning. The Labor Department said the number of people claiming new unemployment benefits last week was roughly flat near a five-year low. Sales of existing homes rose in February to a three-year high, according to the National Association of Realtors.
The yield on the 10-year U.S. Treasury note fell to 1.92 percent from 1.96 percent earlier Thursday as demand increased for ultra-safe investments.
In the tumbling tech sector, Oracle fell $3.47, or 9.7 percent, to $32.30. Juniper dropped 42 cents, or 2.2 percent, to $18.89. Cisco list 83 cents, or 3.8 percent, to $20.84. H-P declined 60 cents, or 2.6 percent, to $22.32. And IBM declined $2.80, or 1.3 percent, to $212.26.
Outside of technology, here are some stocks that made big moves:
— Struggling drug company AstraZeneca jumped after saying it would cut 2,300 more jobs worldwide and overhaul its research operations. That brings to 11,000 the number of job cuts announced in the past 13 months. Shares rose $1.77, or 3.8 percent, to $47.95.
— Publisher Scholastic Corp. plunged after shrinking demand for its best-selling "The Hunger Games" books forced it to cut its guidance for the year. The company's fiscal third-quarter loss nearly doubled. Shares fell $4.32, or 13.9 percent, to $26.75.
— Movado Group Inc. dropped after the luxury watchmaker said its fiscal fourth-quarter net income fell 26 percent. The stock dropped $3.89, or 10.5 percent, to $33.23.
Daniel Wagner can be reached at www.twitter.com/wagnerreports.
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