Lower-than-expected sales at Cisco Systems sent technology stocks tumbling Wednesday while the overall market was little changed after the Federal Reserve announced a widely expected interest rate hike. A jump in oil prices contributed to mild profit-taking.
The Fed's Open Market Committee nudged interest rates up a quarter percentage point, bringing the federal funds rate -- the interest banks charge each other on overnight loans -- to 2 percent. The market had little reaction to the rate hike, though investors closely read the Fed's policy statement for hints about what lies ahead. Analysts took it as a good sign that the language in the statement was largely unchanged.
"This gives a very positive tone to their outlook on the U.S. economy, despite higher energy prices," said Joseph V. Battipaglia, chief investment officer at Ryan Beck & Co. "There's nothing to fear on the inflation front from where they sit, and they see flexibility in the labor market, which suggests they will allow faster job growth to show itself without having to move any quicker on rate changes."
The Dow Jones industrial average fell 0.89, to 10,385.48. The Standard & Poor's 500-stock index rose 1.17, or 0.1 percent, to 1162.91. The Nasdaq composite index fell 8.77, or 0.4 percent, to 2034.56, reflecting investors' disappointment with Cisco Systems.
Cisco shed $1.31, or 6.6 percent, to $18.44, after issuing results that met profit expectations but missed sales forecasts. Growth at the world's leading maker of routers and switches that move data over computer networks remains strong despite cautious spending by its corporate customers, but management warned that it could face increased competition, particularly from Asia-based rivals.Shares of Dell and Hewlett-Packard declined after UBS AG analyst Benjamin Reitzes reduced his rating on the two largest makers of personal computers, citing slowing demand in 2005 and increased competition in computer printers. Dell slipped 58 cents, to $36.85, while Hewlett-Packard fell 73 cents, to $18.97.
Banking shares climbed on speculation that borrowing demand will increase as consumers seek loans before interest rates rise more. Bank of America gained 30 cents, to $46.23. Wachovia rose 14 cents, to $51.72.
Federated Department Stores, which operates Macy's and Bloomingdale's, rose 5 cents, to $53.85, as a rise in fiscal third-quarter earnings topped analysts' expectations.
* The New York Stock Exchange composite index rose 4.88, to 6891.22; the American Stock Exchange index rose 8.58, to 1335.23; and the Russell 2000 index of smaller-company stocks rose 2.97, to 609.61.
* Advancing issues outnumbered declining ones by 10 to 7 on the NYSE, where trading volume rose to 1.5 billion shares, from 1.45 billion on Tuesday. On the Nasdaq Stock Market, advancers outnumbered decliners by 7 to 6 and volume totaled 1.83 billion, up from 1.7 billion.
* The price of the Treasury's 10-year note fell $1.56 per $1,000 invested, and its yield rose to 4.25 percent, from 4.23 percent on Tuesday.
* The dollar rose against the Japanese yen and the euro. In late New York trading, a dollar bought 107.17 yen, up from 105.70 late Tuesday, and a euro bought $1.2895, down from $1.2903.
* Light, sweet crude oil for December delivery settled at $48.86, up $1.49, on the New York Mercantile Exchange.
* Gold for current delivery fell to $434.00 a troy ounce, from $435.70 on Tuesday, on the New York Mercantile Exchange's Commodity Exchange.
Bloomberg News contributed to this report.