FILE - In this Nov. 3, 2010 file photo, Christopher Trimble, left, speaks with fellow trader Ryan Falvey on the floor of the New York Stock Exchange.
FILE - In this Nov. 3, 2010 file photo, Christopher Trimble, left, speaks with fellow trader Ryan Falvey on the floor of the New York Stock Exchange.
Stocks tumbled Thursday after a disappointing outlook from Cisco Systems rattled the market and as world leaders attempt to come up with plans to strengthen a weak global economy.
The Dow Jones industrial average fell more than 110 points in morning trading, led lower by Cisco. The technology-heavy Nasdaq composite index tumbled 2 percent.
For the second straight quarter, Cisco provided investors with a disappointing sales forecast. That sent the Dow component's shares down nearly 16 percent.
The computer network equipment maker said its revenue will rise by less than half of what analysts' had predicted for its November through January quarter. There are worries that smaller competitors are cutting into Cisco's market share.
Technology shares have been among the best performing in recent months as business starts to pick back up with more companies investing in new technology coming out of the recession. Cisco's cautious forecast puts a damper on expectations for broader growth in the sector in the coming quarters.
The Dow fell 110.04, or 1 percent, to 11,246.69 in morning trading. The Nasdaq dropped 50.57, or 2 percent, to 2,528.21.
The Standard & Poor's 500 index fell 12.66, or 1 percent, to 1,206.05.
Volume could be light throughout the day because of the Veterans' Day holiday, which would exaggerate moves. Bond trading is closed for the holiday and federal government offices are closed so there will be no readings on the economy.
Investors were also cautious Thursday as leaders from major rich and developing countries began a summit in South Korea. The Group of 20 is trying to hammer out plans to help support a global recovery that has accelerated in some emerging economies like China while more developed countries like the U.S. have struggled to rebound.
Currency manipulation, trade gaps and protectionism are the major topics the group is expected to discuss. Some countries criticized the U.S. last week after the Federal Reserve announced a bond-buying program that effectively cut the value of the dollar. The U.S. and others have criticized China for holding its currency artificially low.
A weak currency helps a country's exports because they become cheaper to sell overseas. That can lead to big trade imbalances and protectionist reactions from government's trying to keep their own countries' goods from being priced out of the world market.
Leaders are trying to sort through those issues to avoid a string of currency devaluations that could stunt a global recovery.
The dollar gained ground against the euro Thursday, and was little changed again Japan's yen. The Japanese government has flooded currency markets multiple times in recent months with yen to cut the value of the currency as it hovers near a 15-year low against the dollar.
The euro has struggled in recent days because of fresh concerns about government debt problems, particularly in Ireland.
A steadily declining dollar over the past two months has helped funnel money into stocks and commodities as investors seek better returns.
China's economy was also worrying investors Thursday after the country said inflation rose in October at its fastest pace in more than two years. Rising inflation could force the Chinese government to impose new controls that could slow growth in the country. That, in turn, could slowdown a global recovery.
Source: http://www.npr.org/templates/story/story.php?storyId=126763568&ft=1&f=
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