MIDDAY MARKETS: Techs falter on Sun downgrade, strong CPI
A downgrade for Sun Microsystems and a strong inflation report left investors skittish at midday Wednesday. The Nasdaq slid 9.63 points to 2,308.72 and the Dow Jones industrial average was off 87.90 points to 10,642.98.
The Inter@ctive Week @Net Index fell 1 point to 237.87.
The Consumer Price Index (CPI), the main gauge of inflation in the United States, rose 0.6 percent last month, according to a report from the Labor Department Wednesday. That's the largest gain since March, when prices rose a matching 0.6 percent, and up significantly from a gain of just 0.2 percent in December.
The strong numbers suggests the Federal Reserve may be more lenient on interest rates in the future. Though the Fed is still expected to cut interest rates in March, the CPI and last week's Producer Price Index (PPI) make a hefty cut look less likely. Economists are suggesting it will most likely drop rates by only 25 basis points next month.
Sun Microsystems (Nasdaq: SUNW) was the Nasdaq's most widely traded stock, down $2.13 to $20.13 as investors grew skittish ahead of its mid-quarter conference call Thursday. Merrill Lynch also downgraded the stock ahead of what many analysts were saying could be a profit warning.
The day's other biggest movers included Intuit (Nasdaq: INTU), which rose $4.19 to $36.88, following its second-quarter report. The financial software maker also got an upgrade, and analyst reports talked up the company's potential to weather economic downturn.
Finisar (Nasdaq: FNSR) took hefty losses, down $4.38 to $13.69 on the heels of its third-quarter earnings report.
Cisco (Nasdaq: CSCO) fell 13 cents to $25.94, Intel (Nasdaq: INTC) was up 13 cents to $31.56, Oracle (Nasdaq: ORCL) was unchanged at $23.12 and Microsoft (Nasdaq: MSFT) rose 56 cents to $56.44.
Amazon (Nasdaq: AMZN) fell 47 cents to $12.03, AOL (NYSE: AOL) rose $1.29 to $46.24 and Yahoo (Nasdaq: YHOO) fell 31 cents to $26.25.
ZDII staff and news wire reports contributed to this roundup.