Stocks had their worst day in nearly a month today, as concerns about Cyprus crept up again, and investors reacted to a disappointing earnings report from tech bellwether Oracle (ORCL -0.73%). The Dow Jones Industrial Average (^DJI -0.93%) fell 90 points, or 0.6%, while the S&P 500 and Nasdaq both dropped nearly 1%.
Towards the end of the session, Standard & Poor's cut its credit rating on Cyprus further into junk, from CCC+ to CCC, and S&P said further downgrades could be on their way. The Cypriot parliament delayed a vote to approve a new bailout package until tomorrow, and the European Central Bank threatened to deny funding and force it out of the eurozone if an agreement wasn't reached by Monday. A collapse in Cyprus could trigger tighter credit markets in Europe and around the world.
Oracle shares, meanwhile, finished down 9.7%, as the tech giant reported a drop in revenue, and missed estimates. The software-maker is a major supplier of corporations and governments, and its slowdown in sales is seen as a harbinger for the global economy. Management blamed the sales miss on a new sales force, but Wall Street seemed to see the quarter as more than a hiccup. Revenue from its hardware division fell 16%.
Tech stocks also paced the Dow's drop, as Cisco Systems (CSCO -0.41%) fell 3.8% after FBR Capital lowered its rating on the networking leader from market perform to underperform. FBR also downgraded Cisco peer Juniper. Analyst Scott Thompson said that the two companies will face lower demand for routing and switching devices as the industry model becomes more service-based.
Hewlett-Packard (HPQ -0.09%) shares also dipped 2.6%, despite the PC-maker's decision to hike its quarterly dividend to $0.1452 a share. Several board members narrowly survived re-election, and there was some serious criticism of its leadership at its shareholder meeting yesterday. Some investors had attempted to remove Chairman Ray Lane, as well. HP shares were also feeling pressure from fellow tech veteran Oracle's big miss.
It wasn't all bad though. Despite the concerns about Cyprus, economic reports at home were favorable. Initial employment claims remained low at 336,000, better than expectations of 345,000, and existing home sales in February also inched higher. The Philadelphia Fed also showed a slight expansion of manufacturing activity in March in the Mid-Atlantic region, beating expectations, and turning around a sharp drop in February.
Finally, Nike (NKE -0.64%) shares were up 8.2% after hours, as profits at the apparel-maker jumped 55%, to $866 million, or $0.73 a share, in its quarterly report, besting expectations of $0.67 a share. Sales climbed 9%, to $6.19 billion, and were particularly strong in North America, which saw an 18% increase. China, however, remained weak, as sales there fell 9%.
