NEW YORK (CNN/Money) -
U.S. stocks markets closed at new 2004 lows Thursday, as Hewlett-Packard's earnings miss and a surge in oil prices exacerbate worries about a second-half slowdown.
A solid after-hours report and forecast from HP rival Dell helped boost shares of that stock, but didn't seem to have much impact on other tech stocks after the bell, as some analysts had speculated it might.
Stock futures point to a flat open Friday, when fair value is taken into account.
On Thursday, the Nasdaq composite (down 29.93 to 1,752.49, Charts) fell 1.7 percent and closed at its lowest level since August 18, 2003.
The Dow Jones industrial average (down 123.73 to 9,814.59, Charts) lost 1.2 percent and closed at its lowest level since November 28, 2003.
The Standard & Poor's 500 (down 12.56 to 1,063.23, Charts) index's loss of 1.1 percent put it at its lowest level since December 10 of last year.
After the close Thursday, Hewlett-Packard rival Dell (DELL: down $0.45 to $33.12, Research, Estimates) reported earnings after the close of 31 cents per share, up from 24 cents a year ago and in line with estimates. The company cited strong demand for its PCs. Dell also said its results will meet analysts' forecasts for the third quarter.
"I thought Dell had good numbers, and it likely shows that they have taken share in a lot of key areas," said Timothy Ghriskey, chief investment officer at Solaris Asset Management. "While that's good for Dell, I don't think it takes the sting out of HP's news. I don't think it has broad implications for the rest of tech."
Computer and printer maker Hewlett-Packard (HPQ: down $2.57 to $16.95, Research, Estimates) -- which wasn't expected to report results for a week -- reported earnings early Thursday of 24 cents a share in its fiscal third quarter, a penny more than a year earlier, but below the 31 cents a share analysts, on average, were predicting.
The Dow component cited weakness in its enterprise servers and storage unit and cut its forecast range for fourth-quarter earnings per share.
The stock slid more than 13 percent and dragged a number of other technology issues with it.
"Hewlett-Packard didn't please us with its results, and neither did Cisco yesterday," said Art Hogan, chief market analyst at Jefferies & Co.
"But the concerns are really more macro," he said. "People are worrying that earnings are decelerating in the second half, that the economy is slowing, and that higher energy prices are intensifying that."
Oil prices surged, hitting new all-time highs as a U.S.-led battle in Najaf, Iraq, sparked worries that a Shi'ite Iraqi militia could make good on threats to sabotage the country's oil infrastructure.
Light crude for September delivery hit $45.75 a barrel, later backing off a bit to settle at $45.50, up 70 cents.
Ghriskey said record-high crude prices remain the market's biggest problem. He said that it's reasonable to expect to see at some point a short-term rally off the oversold conditions, but not while oil prices are so high.
"Light sweet crude is over $45 a barrel now, and that's a big drag on various parts of the economy," Ghriskey said. "I think at some point, the price of oil falls and that sets off a rally in the market."
In addition to Dell, two other tech companies issued positive after-hours news.
Computer data storage maker Brocade Communications (BRCD: Research, Estimates) reported earnings that surpassed estimates and rose from a year earlier. Business software developer BEA Systems (BEAS: Research, Estimates) boosted its fiscal third-quarter earnings per share forecast. The stock of both companies gained in after-hours trade.
Friday brings a some potentially market-moving economic data as well. Due before the open, the producer price index for July is expected to have risen 0.2 percent, after falling 0.3 percent in June. The so-called "core" PPI is expected to have risen 0.1 percent, after having risen 0.2 percent in June.
Also due: the June trade balance report and the August read on consumer sentiment from the University of Michigan.
Tech slowdown worries
Similar concerns hurt stocks Wednesday, though blue chips managed to recover by the close of that session, while techs did not. Disappointment about Cisco Systems (CSCO: down $0.50 to $17.79, Research, Estimates)' results and outlook sent that stock reeling, and it weighed on the broader tech sector. Cisco continued to fall Thursday, losing another 2.7 percent.
Other big-name tech shares fell as well Thursday, including Intel (INTC: down $0.92 to $21.24, Research, Estimates), which lost more than 4 percent.
But the sell-off wasn't limited to tech.
Declines were broad based, with 27 out of 30 Dow issues tumbling.
"It's still a situation where fundamentals are decent, but the pressure of the continuing high oil prices and a profit surprise, like HP today, persist," said Joseph Battipaglia, chief stock strategist at Ryan, Beck & Co.
"I think the market is trying very hard to put in a bottom, but it needs some good news on oil prices, on the economy, before we can see decent gains," he added.
What about Wal-Mart?
The negative HP earnings news trumped solid earnings from Wal-Mart Stores (WMT: up $1.02 to $52.65, Research, Estimates).
The world's biggest retailer reported second-quarter earnings of 62 cents a share, up from 52 cents a year earlier and a penny above estimates. The company also boosted its full-year earnings guidance, and shares of the Dow component gained about 2 percent.
Among other movers, Cyberonics (CYBX: down $9.59 to $14.36, Research, Estimates) plunged 40 percent in active Nasdaq trade, after U.S. regulators opted not to approve its experimental device geared toward treating depression.
Corning (GLW: down $0.89 to $9.77, Research, Estimates) shares fell 9 percent, after UBS downgraded the fiber-optics component maker to "neutral" from "buy." It had cut its 12-month price target and its 2004 and 2005 earnings forecasts, due to worries about slowing demand.
On the economic front, the government reported that retail sales rose 0.7 percent in July, after falling 0.5 percent in June, but the July increase fell short of economists' forecasts for a 1.1 percent increase.
Market breadth was negative. On the New York Stock Exchange, losers beat winners by more than 11 to five on volume of 1.40 billion shares. On the Nasdaq, decliners topped advancers by 11 to four on volume of 1.62 billion shares.
In the Treasury bond market, the 10-year note rose 6/32 of a point, pushing its yield down to 4.25 percent from 4.27 percent late Wednesday. Bond prices and yields move in opposite directions.
In currency trading, the dollar fell versus the euro and was barely higher versus the yen.
COMEX gold fell $1.30 to settle at $396.60 an ounce.
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