Markets Down on Cisco's Report

Technology stocks sagged after bellwether Cisco Systems Inc. reported a sharp quarterly loss and remained guarded about the future, dimming hopes the sector can quickly snap out of its slump.

The tech-laden Nasdaq Composite Index fell 42.95 points, or 1.95 percent, to 2,155.82. Cisco, which posted a net loss of $2.69 billion after charges, led the index lower with a decline of $1.29 to $19.09.

The blue-chip Dow Jones industrial average also gave way to selling pressure by the end of the day, falling 17.05 points, or 0.16 percent, to 10,866.46. The broader Standard & Poor's 500 Index dropped 5.79 points, or 0.46 percent, to 1,255.41.

"Everybody wants to believe that the worst is over, but why does that have to be?" asked Donna Van Vlack of Brandywine Asset Management, which oversees about $7 billion. Cisco stock is "still not cheap, there's still no visibility, it has a lot of issues and the news seems to be getting incrementally worse."

"Old Economy" behemoth General Electric Co. put a floor under blue-chip shares for part of the session after it said it was well-positioned to battle the economic downturn and narrowed its full-year profit target. GE turned lower by the end of the session, however, falling 5 cents to $49.43.

Precious metals, typically a refuge in uncertain equities markets, ranked as one of the best-performing groups in the S&P 500. The Philadelphia Stock Exchange gold and silver index surged 6.57 percent.

Tuesday’s Highlights

Blue chip stocks closed lower Tuesday after new government data showed worker productivity fell for the first time in six years, stoking fresh concerns about the slowing economy and brewing inflation.

But technology shares rose after Morgan Stanley raised its rating on Cisco, saying it expects the market for the company's key products to turn the corner soon.

The blue chip Dow Jones industrial average lost 51.66 points, or 0.47 percent, at 10,883.51, led lower by financial shares like American Express.

The broader Standard & Poor's 500 Index dipped 2.39 points, or 0.2 percent, to 1,261.12.

The tech-laced Nasdaq Composite Index rose 25.09 points, or 1.15 percent, at 2,198.66, boosted by Cisco and communications equipment maker Ciena.