Intel and Cisco Lead the Dow Lower as Apple Shares Fall

The Dow Jones Industrial Average (DJINDICES: ^DJI  ) was down early on Thursday, falling more than 86 points as of 11:30 a.m. EST. Intel (NASDAQ: INTC  ) and Cisco (NASDAQ: CSCO  ) were some of the index's worst performers, while fellow tech giant Apple (NASDAQ: AAPL  )  shed more than 1%.

ISM meets expectations
There weren't many economic reports released early on Thursday, but those that were released were not particularly negative. The Institute for Supply Management Manufacturing PMI, a measure of manufacturing activity in the U.S., came in line with expectations: The reading of 57 was exactly what economists had anticipated.

The report indicates that the U.S. manufacturing sector grew for the seventh consecutive month. The reading might have been seen as a positive for the markets, but investors were evidently occupied with other matters.

Intel could suffer from continued PC slump
Shares of PC chip giant and Dow Jones component Intel had dropped more than 1.3% by late morning. Intel's underperformance may have been due to a recent note from analysts at Sterne Agee.

Sterne Agee continues to remain neutral on Intel, largely based on the outlook for traditional PCs. In particular, Sterne Agee expects first-quarter PC sales to be sluggish. That's obviously problematic for Intel; while the company has begun to aggressively target the mobile space, Intel continues to supply the majority of traditional PC processors.

Cisco underperforms
Cisco was another tech name tumbling on Thursday, falling nearly 2%. Unlike Intel, however, there wasn't any major news to justify Cisco's sell-off. Instead, investors may have been rebalancing their portfolios at the beginning of the year, selling Cisco and moving into other positions.

Although Cisco did finish positive in 2013, it underperformed the Dow in rising a bit more than 15%.

Apple hit by downgrade
The iPhone maker was down about 1.3% early in the session, a notable move for a company with a market cap of about $500 billion. Like Intel, the Apple sell-off may have been prompted by a research note. A Wells Fargo analyst downgraded Apple to kick off 2014, cutting the rating on the stock from outperform to market perform.

Wells Fargo found fault with Apple's gross margin. Previously, the bank believed the release of the iPhone 5s would propel Apple's gross margin higher as consumers upgraded to more expensive devices. However, at Apple's current valuation, Wells Fargo believes higher gross margin expectations are already built into the company's share price.

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