Midday Market Update: Tech and Financial Shares Drag on the Markets

By Jennifer Yousfi
Managing Editor

The U.S. stock indices trended lower for the second straight day on continued concerns about the technology and financial industries.

At noon ET, the blue-chip Dow Jones Industrial Average Index had posted a slight decline of 30.61 points (-0.25%), to trade at 12,392.25. The tech-laden Nasdaq Composite Index dropped 19.49 points (-0.84%), to reach 2,304.87. And the broader Standard & Poor's 500 Index slumped 2.34 points (-0.17%), to hit 1,338.79.

Sectors were mixed with the energy sector (0.48%), and the utilities sector (0.79%), posting the largest gains on the strength of $106 per barrel oil prices. The technology sector had the biggest decline, taking a –1.30% hit on weak earnings reports.

Shares of Oracle Corp. (ORCL) dropped after profits failed to meet analyst expectations. Disappointing ad revenue sent Google Inc. (GOOG) shares lower.

"On the tech side, we have two negative points with the numbers out of Oracle and Google," Owen Fitzpatrick, head of U.S. equities at Deutsche Bank, told MarketWatch. "We're starting to see some softness in there, but it's not a big slide."

Analysts at both Lehman Brothers Holdings Inc. (LEH) and Sanford C. Bernstein & Co. LLC lowered earnings forecasts for Wachovia Corp. (WB) and Merrill Lynch & Co. Inc. (MER) sending shares lower.

“There are a lot of unknowns in the financial sector which I think could be adding to the economic headwinds that we're going to be facing for the next 12 months,” Kevin Divney, chief investment officer at Putnam Investments in Boston, which manages $190 billion, said in an interview with Bloomberg Television.

In overseas markets, Japan's Nikkei Index dropped 102.05 points to close at 12,604.58. Hong Kong's blue-chip Hang Seng Index increased 47.21 points to close at 22,664.22.

In Europe, the Paris-based CAC40, London's FTSE 100, Madrid's IBEX 35 and the Frankfurt-based DAX all posted gains.

At midday, the dollar had gained ground against the euro (up 0.272%) and the yen (up 0.841%), but lost ground against the pound sterling (down 0.274%).

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