Stocks slumped today as investors were jolted by a new batch of bleak corporate earnings forecasts including a bombshell from Britain's Marconi that its profits would be halved this year.
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The announcement from the leading telecommunications equipment maker hit related technology stocks worldwide. But investors returning from the Independence Day holiday, which closed financial markets on Wednesday, still got more bad news from retailer Federated Department Stores and other companies.
Tech heavyweights, including Web gear giant Cisco Systems, led the Nasdaq Composite Index to a loss of 60.60 points, or 2.83 percent, at 2,080.20, according to the latest available data. Nasdaq, which logged its fourth down session in a row, saw nearly two stocks fall for each gainer.
The blue chip Dow Jones industrial average unofficially closed down 91.25 points, or 0.86 percent, at 10,479.86 and the broad Standard & Poor's 500 Index was 15.20 points lower, or 1.23 percent, at 1,219.25.
"It basically stems from the Marconi announcement which started a new sell-off in tech stocks across the board. The news was pretty bad," said Peter Cardillo, director of research at Westfalia Investments.
But the selling was a "bit exaggerated", Cardillo noted, adding that trading volumes were very low with many people still on holiday and with others fence-sitting ahead of Friday's key U.S. unemployment report for June. Economists on average expect the unemployment rate ticked up to 4.6 percent from 4.4 percent in May.
Marconi lost $3.68, or a whopping 52.3 percent, at $3.35 in U.S. trading and was Nasdaq's third most-active stock. The company blamed the global telecoms industry slowdown and the Marconi woes spread to other issues including Finland's Nokia, the world's biggest mobile phone maker, which fell $1.84 to $20.35 and U.S.-based telecom gear giant Lucent Technologies , off 39 cents at $6.30.
Retail shares slumped after Federated, the parent of Macy's and Bloomingdale's department stores, cut its second-quarter and full-year profit outlook. Shares fell $2.37 to $38.01. Rival May Department Stores Co. lost $1.34 to $32.11. The S&P retail index lost 1.62 percent.
Dutch computer chip equipment company ASML Holding, fell $1.42 to $20.80 on the Nasdaq. The Philadelphia Stock Exchange's semiconductor index fell 3.11 percent, reflecting a drop in a number of sectoral firms including sectoral giant Intel, down 62 cents at $29.84.
A bright spot was the energy sector as stocks rose across the board, partly in line with firmer crude oil prices after new data showed U.S. petroleum stockpiles fell sharply last week. The S&P oil and gas index rose 1.71 percent on gains by the likes of Apache Corp , up $1.51 to $51.01.
Waiting for Jobs Report
In economic news, the National Association of Purchasing Management reported its June index of non-manufacturing activity rose to 52.1 from 46.6 in May.
The government reported U.S. weekly jobless claims rose to 399,000 for the week ended June 30, in line with economists' estimates, from a revised 392,000 in the prior week.
The main economic event this week comes Friday when the government reports on U.S. payrolls.
Analysts cautioned against reading too much into the market's action during the rest of the week.
On the NYSE, 692 million shares changed hands, while on the Nasdaq, about 979 million shares were traded.