Tech stocks fall on weak Oracle earnings
Tech stocks fall after software giant Oracle says it's struggling to close deals. IBM and other tech stocks fall, too, while broader market is flat.
Technology stocks fell Wednesday, dragged down by a weak earnings report from the business software maker Oracle Corp. Broad market indexes were flat. The Dow Jones industrial average eked out a gain of 4 points after having been down 104 points at midday. Tech stocks in the Standard & Poor's 500 index fell 2 percent. Oracle plunged 12 percent after the business software company said it was struggling to close deals.Skip to next paragraph
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The rare earnings miss by Oracle seemed to reinforce worries that businesses and the government may cut back on technology spending. Especially worrying was a weak 2 percent gain in new software licenses, a key sign of demand from other businesses. Oracle had predicted gains of as much as 16 percent.
Those worries hurt other big technology companies. IBM Corp. was by far the biggest loser in the Dow, falling 3.1 percent to $181.47. A bright spot was the BlackBerry maker Research In Motion Ltd., which jumped 10 percent to $13.78 on rumors that it might be a takeover target.
Investors also had more to worry about from Europe. New data showed extensive lending from the European Central Bank to European banks. The initial reaction to the $639 billion in lending by the ECB was positive, but then worry set in that Europe's banks needed so much help in the first place.
The Dow edged up 4.16 points, less than 0.1 percent, to close at 12,107.74. On Tuesday the Dow jumped 337 — its biggest gain this month — on a strong bond sale in Spain and a surge in new home construction in the U.S.
The Standard & Poor's 500 rose 2.42 points, or 0.2 percent, to 1,243.72. Outside of the 2 percent decline for technology companies, prices rose or were flat in the rest of the S&P 500's 10 sectors.
The Nasdaq composite fell 25.76 points, or 1 percent, to 2,577.97.
Consumer staples rose with help from a 1.7 percent increase by Coca-Cola Co. and a gain of 1.2 percent at Kraft.
Nike Inc. rose 2.9 percent after reporting strong demand and higher prices for its shoes and clothing.
Volume was much lower than usual at 3.5 billion shares, which can make prices more volatile.
"Any hint of positive data, we think you have the potential for a pretty nice rally," either before the end of this year or early in 2012, Kavanagh said.