Stocks struggle on Cisco's weakness

Updated: 8:40 p.m. ET

 

At least during the regular session, stocks had a better day than Monday or Tuesday -- but not that good a day, as stocks struggled on investor worries about Europe and  technology stocks. 

Thursday, however, may be quite volatile after JPMorgan Chase (JPM) said one of its investment businesses had generated paper losses of $2 billion. Futures trading suggests U.S. stocks will open lower on Friday.

The Dow Jones Industrial Average ($INDU) managed a small gain -- its first after six straight losses. But the blue chips saw a 97-point rally early in the session fade substantially during the day.  The Nasdaq-100 Index ($NDX) was lower, in large part for same the reason that the Dow struggled: Cisco Systems (CSCO), which tumbled $1.97 to $16.81 after offering weaker-than-expected​ guidance for its fiscal fourth quarter.

What gave the market a boost at the start was a decent -- but not great -- report on initial jobless claims in the United States. Jobless claims were at 367,000 in the latest week, down 1,000 from a revised 368,000 the prior week.  European stocks rose modestly as the eurozone debt crisis eased -- at least for today.

Crude oil (-CL) in New York and gold (-GC) were modestly higher, while the dollar was a touch higher.

The Dow closed up 20 points to 12,855. The Standard & Poor's 500 Index ($INX) gained 3 points to 1,358, and the Nasdaq Composite Index ($COMPX) was down 1 point to 2,934.

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The Nasdaq-100 was down 5 points to 2,616. Cisco contributed nearly 10 points to the loss. Oracle (ORCL), down 76 cents to $27.02, subtracted an additional 3.4 points from the index. Apple (AAPL), up $1.34 to $570.52, added 1 point to the index.

JPMorgan Chase was down 6.8% after hours to $38 after disclosing that one of its hedging operations had generated a paper loss of some $2 billion. Stocks of rival banks were lower as well.

In addition, Nordstrom (JWN) shares fell 5.1% to $50.81 from a regular close of $53.53. In the fiscal first-quarer, the company said earnings rose 2.9% to $149 million, or 70 cents a share, from $145 million, or 65 cents a share, a year ago.

Costly initiatives like free shipping brought in customers but cut into the upscale department store chain's profit margin.

Analysts had expects 75 cents in earnings. Revenue was $2.53 billion, in line with estimates. For the fiscal year, Nordstrom expects to earn $3.30 to $3.45 a share. Analysts have been looking for $3.48.

Crude oil settled up 27 cents to $97.08 a barrel. Natural gas (-NG) was up 3 cents to $2.468 per million British thermal units. It's up 11.6% this week as production cuts are boosting prices.

The retail price of gasoline was off 1.1 cents to $3.739 a gallon today, reported AAA's Daily Fuel Gauge Report. For those keeping score, the price has fallen for 24 straight days and is now 5.1%, or 19.7 cents, below its 2012 peak of $3.936 a gallon. It is still up 14.1% for the year.

Gold, meanwhile, settled at $1,595.50 an ounce, up $1.30. Silver (-SI) fell 6.3 cents to $29.178 an ounce. Copper (-HG) added 3.1 cents to $3.6905 a pound.

Interest rates were slightly higher, with the 10-year Treasury yield at 1.884%, up from Wednesday's 1.835%. The dollar was lower against major currencies.

Energy prices -- New York close
			Thur.			Wed.			Month chg.			YTD chg.
Crude oil (-CL)			$97.08			$96.81			-7.43%			-1.77%
(per barrel)
Heating oil (-HO)			$2.9834			$2.9991			-6.31%			2.37%
(per gallon)
Natural gas (-NG)			$2.4870			$2.4650			8.84%			-16.79%
(per mil. BTU)
Unleaded gasoline (-RB)			$3.0102			$3.0241			-3.66%			13.28%
(per gallon)
Brent crude			$112.73			$113.20			-5.70%			4.98%
(per barrel)
Retail gasoline			$3.7390			$3.7500			-2.02%			14.13%
(per gallon; AAA)

Slow spending growth worries Cisco
Cisco's price decline subtracted 14 points from the Dow and 9 points from the Nasdaq-100. The networking giant said it would earn 44 cents to 46 cents a share for the July-ending quarter, with year-over-year revenue growth of 2% to 5%. That would put the high side of the range at $11.75 billion. Analysts were looking for 49 cents in earnings and revenue of $12 billion.

The company blamed the weak forecast on economic conditions in Europe, slow decision-making among corporate customers and slow public-sector spending globally.

Excluding items, Cisco earned 48 cents a share in its fiscal third quarter, beating the average estimate of 47 cents.

Rivals Juniper Networks (JNPR) and Polycom (PLCM) were also dropping today.

 Buffett is a Coty ally in bid for Avon
A month after failing to gain traction with its $10 billion bid for Avon Products (AVP), Coty announced a higher $10.7 billion offer for the cosmetics maker on Thursday with an interesting new twist: Warren Buffett is a new ally.

In a letter to Avon's board, Coty listed Berkshire Hathaway as a prominent new provider of equity financing, alongside the German conglomerate Joh. A. Benckiser and other unnamed clients of BDT Capital Partners. It's an unusual move. Buffett has only occasionally played deal financier instead of buying a company outright. The biggest and most recent was Berkshire Hathaway's backing of M&M Mars' $23 billion purchase of Wm. M. Wrigley in 2008.

While Buffett's presence gives the takeover bid some glamour, investors are skeptical that Coty will succeed. Avon fell 71 cents to $20.89 and was little changed after hours.

Monster Beverage, Infospace jump
Monster Beverage (MNST) surged $5.86 to $71.17. The distributor of energy drinks and fruit juices reported first-quarter earnings that exceeded analysts’ estimates, helped by international sales.

InfoSpace (INSP) rallied $2.38 to $13.36. The Internet search services company forecast second-quarter sales of at least $92.5 million. Two analysts estimated $88.6 million, on average, Bloomberg News said.

News Corp. (NWSA) added 94 cents to $20.32. It reached a four-year high of $20.62. The media company posted third-quarter profit excluding some items of 37 cents a share, beating the average analyst estimate of 31 cents. The company also doubled its stock-buyback program to $10 billion.

Priceline.com (PCLN) fell $37.84 to $681.11; it had fallen to as low as $680.52. The biggest U.S. online travel agency forecast second-quarter earnings will be no more than $7.40 a share; analysts were looking for $7.43.

Shares of Chesapeake Energy (CHK), one of the nation's largest natural gas producers, fell 30 cents to $17.18. The Wall Street Journal reported the company has saddled itself with about $1.4 billion of previously unreported liabilities over the next decade through off-balance-sheet financial deals. Most of this liability occurs this year and next year, at a time when Chesapeake is scrambling to raise cash to cover its operating costs and move into the more lucrative oil business.

Greece tries to avoid a new election
Greek political parties were engaged in a last-gasp attempt to form a government and avoid new elections on Thursday after voters rejected an international bailout and plunged the debt-ridden country into crisis.

Socialist PASOK party leader Evangelos Venizelos is the third and last political leader to try to form a government after Sunday's election, which left pro- and anti-bailout forces balanced almost equally.

Separately, Spanish stocks were higher on hopes that a solution can help the nation's banking sector. Spain's government took effective control of Bankia, one of the country's biggest banks, after days of market anxiety over the lender's viability.

Short hits from the markets -- New York close
			Thur.			Wed.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0900%			0.090%			0.00%			800.00%
5-year Treasury note			0.774%			0.760%			-4.56%			-6.75%
10-year Treasury note			1.884%			1.835%			-1.62%			0.69%
30-year Treasury bond			3.051%			3.039%			-1.87%			5.61%
Currencies
U.S. Dollar Index			80.257			80.232			1.79%			-0.33%
British pound			1.6158			1.6137			-0.52%			3.99%
(in U.S. $)
U.S. $ in pounds			£0.619			£0.620			0.52%			-3.84%
Euro in dollars			$1.30			$1.29			-2.24%			-0.05%
(in U.S. $)
U.S. $ in euros			€ 0.772			€ 0.773			2.29%			0.05%
U.S. $ in yen			80.13			79.64			0.16%			3.93%
U.S. $ in Chinese			6.34			6.33			0.55%			0.15%
yuan
Canada dollar			$0.999			$0.998			-1.41%			1.83%
(in U.S. $)
U.S. dollar			$1.002			$1.003			1.43%			-1.80%
(in Canadian $)
Commodities
Gold (-GC)			$1,595.50			$1,594.20			-4.13%			1.83%
(per troy ounce)
Copper (-HG)			$3.691			$3.660			-3.63%			7.41%
(per pound)
Silver (-SI)			$29.1780			$29.2410			-5.93%			4.52%
(per troy ounce)
Wheat (-ZW)			$6.0125			$6.0000			-8.14%			-7.89%
(per bushel)
Corn (-ZC)			$5.8750			$6.073			-7.37%			-9.13%
(per bushel)
Cotton			$0.8182			0.8582			-8.48%			-10.75%
(per pound)
Coffee			$1.7865			1.7505			-0.50%			-22.21%
(per pound)
Crude oil (-CL)			$97.08			$96.81			-7.43%			-1.77%
(per barrel)