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US STOCKS-Wall St falls as Oracle sinks, Cyprus worries escalate

Source : REUTERS
Last Updated: Thu, Mar 21, 2013 21:02 hrs

* Oracle shares lose almost 10 pct after weak results

* EU gives Cyprus until Monday to raise funds

* Jobless claims up for week, but falling 4-week average on trend

* Dow off 0.6 pct; S&P 500 off 0.8 pct, Nasdaq off 1 pct

By Caroline Valetkevitch

NEW YORK, March 21 (Reuters) - U.S. stocks fell on Thursday as Oracle's revenue fell far short of expectations and worries intensified about the effect of Cyprus' troubles on the euro zone.

Oracle Corp shares lost 9.7 percent to $32.30, a day after its revenue disappointment, which it blamed on sales execution. It was the stock's biggest percentage drop since December 2011.

Anxiety about Cypriot finances increased after the European Union gave Cyprus until Monday to raise the billions of euros it needs to get an international bailout - or face the collapse of its financial system and likely exit from the euro bloc. Late in the session, Standard & Poor's lowered Cyprus' sovereign credit rating.

The latest euro-zone concerns hit the market after weeks of gains that drove the Dow up to break record highs and lifted the S&P 500 to within striking distance of its all-time record close of 1,565.15.

"As there's a little more anxiety about what's happening in Cyprus and Europe overall, you're seeing traders looking to pare back risk exposure," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

"I think the realization is, there isn't going to be a quick remedy to the situation, nor is it easy to forecast what's going to happen. Uncertainty breeds selling, especially in a market that's gone as far as we have in the previous two weeks."

Investors fear a collapse of the banking system in Cyprus will tighten credit across Europe and become yet another hurdle on the region's bumpy road out of economic crisis. Adding to those fears, data showed the region's economy contracted more than expected in March.

The Dow Jones industrial average slid 90.24 points, or 0.62 percent, to end at 14,421.49. The Standard & Poor's 500 Index dropped 12.91 points, or 0.83 percent, to finish at 1,545.80. The Nasdaq Composite Index lost 31.59 points, or 0.97 percent, to close at 3,222.60.

At its session low of 14,383.02, the Dow was down more than 100 points. The Nasdaq fell slightly more than 1 percent during Thursday's slide.

The CBOE Volatility Index or VIX, Wall Street's favorite barometer of fear, shot up 10.4 percent to 13.99.

Cisco was the Dow's biggest percentage loser, down 3.8 percent at $20.84, after brokerage FBR downgraded its rating on the network equipment maker's stock and cut its price target. Among other tech shares, International Business Machines lost 1.3 percent to $212.26.

The S&P basic materials sector index fell 1.6 percent, making it the heaviest weight on the S&P 500. Copper prices also slid.

The benchmark S&P 500 index is on track to post only its second weekly percentage drop so far this year, a testament to its impressive 2013 run.

Among the day's other falling shares, apparel retailers Guess, Tilly's and Pacific Sunwear of California slid after they forecast first-quarter results significantly below analysts' estimates.

Guess fell 7.2 percent to $25.01, Tilly's shed 8.4 percent to $12.60, and Pacific Sunwear lost 9.8 percent to $2.20.

The euro-zone concerns overshadowed a batch of reports suggesting the U.S. economic recovery was on the right track and solid first-quarter growth in China.

A downward trend in jobless claims, an increase in factory activity and a rise in sales of existing homes pointed to growing momentum in the U.S. economy during the first quarter of the year.

Initial claims for U.S. unemployment benefits inched higher in the latest week, but the four-week average of new claims - a measure of labor market trends - fell to its lowest level in five years.

Volume was roughly 5.9 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the 2012 average daily closing volume of about 6.45 billion.

Decliners outpaced advancers on both the NYSE and the Nasdaq by a ratio of nearly 2 to 1.




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