Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.
The stock market edged higher again today, as President Obama's nominee to replace Ben Bernanke at the Federal Reserve talked policy before the Senate. Janet Yellen, as one might imagine by the market's reaction, voiced support for the continuation of quantitative easing initiatives, which pump $85 billion a month into the economy. On the heels of her dovish remarks, the S&P 500 Index (SNPINDEX:^GSPC) went on to finish at a record high, adding eight points, or 0.5%, to end at 1,790. The index is up more than 25% in 2013.
Though nine out of 10 sectors finished higher Thursday, the technology sector was the single notable decliner, and all three of today's laggards hail from that corner of the markets. The most substantial loser, and perhaps the catalyst behind the entire tech sector's misery today, was Cisco Systems (NASDAQ:CSCO), which saw its stock take a remarkable 11% haircut after severely disappointing earnings and forecasts. More than $10 billion was erased from Cisco's valuation today, as earnings fell, and emerging markets showed weak growth. Cisco hasn't been a growth stock since the '90s, but the 2% sales growth was seen as especially weak, and a bad sign for the tech sector, in general.
Hewlett-Packard (NYSE:HPQ) followed Cisco's lead, slumping 5.4% Thursday. Of course, Hewlett-Packard not only faced headwinds from its tech peers today, but it also had some problems of its own to report. The HP Chromebook 11 is getting pulled from shelves at retailers around the country, as the charger for the laptop has problems with overheating. It's never a good time to have a problem like this, but several weeks before Black Friday's shopping rush may be the worst time of year for major product issues to arise.
Lastly, chip maker Xilinx (NASDAQ:XLNX) saw shares tumble 4.3% today. Unlike Cisco and HP, no substantive developments sent the stock lower Thursday. Xilinx is 50% more volatile than the overall stock market, so when tech mainstays like Cisco convey a fundamental weakness in the business, investors are prone to extrapolate, and punish this smaller tech player. It doesn't help that a number of Wall Street analysts have only modest hopes for Xilinx's stock price; Piper Jaffray reiterated its neutral rating on shares yesterday, giving the stock a price target with a mere 9% upside to Tuesday's close.