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Tech sector troubles drag Wall Street lower

Troubles in the technology sector pushed stocks lower Wednesday, with Apple Computer Inc. and a downgrade of Intel Corp. leading the market downward.
/ Source: The Associated Press

Troubles in the technology sector pushed stocks lower Wednesday, with Apple Computer Inc. and a downgrade of Intel Corp. leading the market downward.

Investor worries about consumer spending intensified after Apple’s lower-than-expected third-quarter revenues. They got more troubling news from Prudential’s downgrade of Intel, which said the company could face disappointing revenues and margins for as long as the next year.

The company news hit an already bruised market, as it followed nasty declines on Wall Street last week. Investors are anxious about Federal Reserve interest rate hikes and high energy costs, issues that could hang over the market for months.

“There’s been nothing to trigger the kind of sell-off we’ve seen yesterday and today,” said Brian Bush, director of equity research, Stephens Inc. “I don’t see a logical explanation, other than just pure nervous speculation and fear.”

Stocks had opened higher after Federal Reserve Chairman Alan Greenspan said in a speech that the economy was weathering the recent jump in energy prices without major disruptions.

The Dow Jones industrial average finished the day down 36.26 points, or 0.4 percent, while the broader Standard & Poor’s 500-stock index fell 7.19 points, or 0.6 percent. The Nasdaq composite index, full of technology stocks, lost 23.62 points, or 1.2 percent.

While Apple beat Wall Street profit forecasts by a penny per share, but revenues came in below forecasts and iPod sales missed expectations by a wide margin. Investors worried the company’s holiday sales might also disappoint. Apple tumbled $1.87 to $49.72.

Intel fell 18 cents to $23.24 after analysts at Prudential downgraded the chip maker’s stock to “underweight” from “neutral weight,” citing potential weakness in revenues and profit margins. Rival chip maker Advanced Micro Devices fell $3 to $21 despite a 73 percent jump in third-quarter earnings that beat profit forecasts by 10 cents per share.

In other earnings news, motorcycle manufacturer Harley-Davidson Inc. said strong worldwide shipments led to a 16 percent rise in profits that beat Wall Street estimates by 6 cents per share. Harley-Davidson rose $1.30 to $46.90.

Dow component Pfizer Inc. rose 54 cents to $24.84 after a British judge ruled to protect the company’s patent on the cholesterol drug Lipitor, which had been challenged by a generic drug maker.

Home builder KB Home said it will begin building and marketing a line of homes designed and decorated by Martha Stewart. KB Home nonetheless fell 40 cents to $64.10, while Martha Stewart Living Omnimedia Inc. fell 85 cents to $20.65.

Overseas, Japan’s Nikkei stock average fell 0.69 percent. In afternoon trading in Europe, Britain’s FTSE 100 was down 0.72 percent, Germany’s DAX index dropped 1.01 percent and France’s CAC-40 lost 0.76 percent.