Tech stocks, market hit by Intel, Europe woes
Tech stocks fell on news that chipmaker Intel, a bellwether for tech stocks, cut its profit outlook. Moody's says it plans to review EU sovereign debt ratings, adding to the general market gloom.
A fresh round of concern over European debt combined with some downbeat news out of the technology sector to send U.S. stocks sharply lower Monday.
Friday's European Union summit produced an agreement to pursue stricter budget rules for the single currency area and also to have euro zone states and others provide up to 200 billion euros ($267 billion) in bilateral loans to the International Monetary Fund (IMF) to help tackle the crisis.
But Moody's Investor Service said it still plans to review the ratings on EU sovereign credit as the agency expressed doubt that the proposed measures will do much to resolve the crisis. That marked a sharp change from Friday, when the market rallied on hopes that European leaders finally had presented a unified front to tackle the problem.
As a result, Wall Street's major indices posted losses of more than 1 percent each at the opening bell, with a warning on tech leader Intel also weighing on sentiment about tech stocks, which pushed the Nasdaq nearly 2 percent down.
"It appears that Europe’s nightmare has not gone away after all, with investors rethinking Friday’s immediately positive response," Andrew Wilkinson, chief economist strategist at Miller Tabak, said in his morning note. "The single euro currency is once again trawling the depths of despair as investors weigh the prospect of further interest rate cuts as further reason to take pot shots at the unit."
In company news, Onyx Pharmaceuticals shares tumbled nearly 10 percent after the Food and Drug Administration said it would not place the firm's application for approval of myeloma drug, known as c-mib, on priority review.
Canaccord Genuity and BMO both lowered price targets for Onyx.
Intel shares plunged after the firm cut its profit outlook and UBS lowered its view on the company for the first quarter in 2012. The stock led the Nasdaq tech barometer lower, with the Dow Jones semiconductor index down about 3 percent.
Martin Marietta has proposed a combination with Vulcan Materials in a stock-for-stock exchange. Shares in both companies have been halted.
Across other markets, oil and precious metals such as gold and silver are lower, while Treasurys are mixed. The US dollar rose against the euro. Volume was light, with just 107 million shares changing hands in the first half hour.
European shares fell 1.3 percent weighed by concerns over politicians' response to the debt crisis in the short-term and the likely impact of austerity measures on economic growth.
Elsewhere Abu Dhabi's Etihad Airways said in a statement on Monday it will buy 12 planes from Boeing including 10 787-9 Dreamliners, in a deal valued at $2.8 billion at current list prices. Boeing shares dropped, even though Morgan Stanley upgraded the stock to overweight.
ConocoPhillips has made a gas find in the southern North Sea near BP's Ula oil and gas field, the Norwegian Petroleum Directorate said on Monday, but more tests are needed to see if the shallow-water discovery is worth developing.
Meanwhile, struggling telecom network equipment maker Nokia Siemens Networks has agreed to sell its fixed line Broadband Access business unit to U.S. firm Adtran as part of a revamp of its operations.
Economic data out of Monday is limited to monthly budget data for November from the US Treasury Department published at 1 pm. Economists polled by Reuters forecast a $139.0 billion deficit, compared with a budget deficit of $98.47 billion in October.