Shares in the major indexes are broadly lower today on the back of a bevy of economic reports and a disappointing earnings release in the technology sector. With roughly an hour left in the trading session, the Dow Jones Industrial Average (DJINDICES:^DJI) is lower by 70 points, or 0.48%.
The economic reports released today -- which fellow Fool Dan Dzombak discusses at length -- paint a generally positive picture of the domestic economy's direction. Among other things, new claims for unemployment insurance came in lower than expected last week, existing-home sales climbed to a three-year high in February, and home prices for the month of January increased by 6.5% on a year-over-year basis.
Despite the generally upbeat news, however, all but six of the Dow's 30 components are trading in the red. The explanation for this seems to be twofold. First, the ongoing crisis in Europe continues to roil the markets. Over the weekend, the Mediterranean island nation of Cyprus was bailed out by the EU and IMF. But to unlock the support, Cyprus must come up with 5.8 billion euros in new revenue, something that it has failed to do thus far. It now has only four more days to find a solution.
Suffice it to say, a Cyprus-induced fracture in the EU would cause panic throughout the financial markets. It would wreak particular havoc on the likes of JPMorgan Chase (NYSE:JPM) and Citigroup (NYSE:C), both of which have significant global trading operations that would expose them to potentially massive losses. For its part, JPMorgan is down by 1.2% today, while Citigroup is 1.4% lower.
And second, technology shares are down following Oracle's (NYSE:ORCL) earnings announcement last night. For the fiscal third quarter ended Feb. 28, the technology giant posted a 2% decline in new software sales and cloud-related subscription revenue. According to CNBC, this dramatically underperformed its previous estimates, which called for growth rates of 3% and 13%, respectively.
The impacts of this are being felt throughout the technology sector, which is down in aggregate by 1.3% in afternoon trading. "When you have a big company like that, it's going to have a big impact on the sector," an analyst at Wells Fargo told The Wall Street Journal. It's largely for this reason, in turn, that the three worst-performing components on the Dow today are all tech stocks: Cisco Systems (NASDAQ:CSCO), IBM, and Hewlett-Packard.
With respect to Cisco, as my colleague Matt Thalman noted earlier, the two companies are close competitors in many of the same areas with similar products and services. Consequently, to echo Matt's point, while "Oracle's weak performance could mean that Cisco is gaining market share, but based on today's stock performance ... it's safe to say investors feel that the market for these devices is weakening."
John Maxfield has no position in any stocks mentioned. The Motley Fool recommends Cisco Systems. The Motley Fool owns shares of Citigroup, JPMorgan Chase & Co., and Oracle. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
More from The Motley Fool
Does a Strong Start Make 2018 a Sure Winner for Stocks?
Find out whether the so-called "January effect" is real.
Meet the 2018 Dogs of the Dow
Learn the basics of this simple dividend-investing strategy.
The Dow's Worst Day in 2017
Even with big gains, there were some scary times for the average.