VIDEO

Wall St down sharply on weak results from Cisco, Wal-Mart

A screen showing the day's final numbers is displayed above the floor of the New York Stock Exchange shortly after the closing of the market in New York, on Aug 15, 2013. US stocks were on track to post their biggest decline since late June on Thursd
A screen showing the day's final numbers is displayed above the floor of the New York Stock Exchange shortly after the closing of the market in New York, on Aug 15, 2013. US stocks were on track to post their biggest decline since late June on Thursday due to disappointing results and outlooks from Dow components Wal-Mart and Cisco. -- PHOTO: REUTERS

NEW YORK (REUTERS) - United States (US) stocks were on track to post their biggest decline since late June on Thursday due to disappointing results and outlooks from Dow components Wal-Mart and Cisco.

Consumer and technology stocks were among the biggest decliners after Wal-Mart Stores' shares fell on a surprise decline in quarterly same-store sales and Cisco Systems shares dropped one day after the network equipment maker announced it was cutting 4,000 jobs.

"Yes, we are down significantly but this is not a panic sell-off considering how much we have rallied so far this year.

People are more realistic," said Mr J.J. Kinahan, chief strategist at TD Ameritrade in Chicago. He added that although the CBOE Volatility Index, a gauge of investor anxiety, rose 11 per cent, the measure was still below 15.

Adding to the sell-off, data showed consumer prices rose broadly in July and new claims for jobless benefits last week fell near a six-year low, factors which could draw the Fed closer toward trimming its US$85 billion (S$107.9 billion) monthly bond-buying programme to stimulate economic growth.

The bond-buying has kept interest rates low and buoyed equity markets this year, while in the bond market Treasuries prices and yields hit two-year highs.

Higher rates raise borrowing costs for consumers and companies and reduce the attractiveness of equities relative to higher-yielding bonds.

The sell-off in equities sparked buying in gold, which rose near a two-month high.

The Dow Jones industrial average was down 198.74 points, or 1.30 per cent, at 15,138.92. The Standard & Poor's 500 Index was down 22.25 points, or 1.32 per cent, at 1,663.14. The Nasdaq Composite Index was down 58.80 points, or 1.60 per cent, at 3,610.47.

The S&P 500 index was heading for its biggest decline since June 20. So far this week, the index is down about 1.7 per cent.

Wal-Mart shares fell 2.6 per cent to $74.35 after the world's largest retailer reported disappointing same-store sales and missed revenue estimates for a fifth consecutive quarter.

The company also lowered its revenue and profit forecasts for the year.

"The Wal-Mart earnings report is as big a macro indicator as (gross domestic product data)," said Mr Nicholas Colas, chief market strategist at ConvergEx Group in New York.

"It shows that (consumer spending) isn't that strong yet - inflation is rising, wages are not, unemployment is still pretty high and that's not a recipe for a strong retail environment."

The technology sector was the biggest laggard on the S&P 500, heavily weighed down by Cisco, which fell 7.1 per cent to $24.51 as brokerages cut price targets on the stock.

Shares of smaller rivals Ciena Corp and F5 Networks were also down. Ciena fell 4.7 per cent to $21.43 while F5 Network slipped 2.9 per cent to $89.83.

One of the few bright spots in retail earnings was Kohl's , which reported a rise in quarterly same-store sales, sending its stock up 5 per cent to $53.45.

Billionaire George Soros added another 2 million shares to his stake in struggling retailer J.C. Penney, regulatory filings showed. The retailer's stock was up 4.5 per cent at $13.70.