The Dow Jones Industrial Average (DOW:DJIA) sank 79.85 points, or 0.7%, to finish at 12,090.03. Weighing on the measure, Intel Corp. (NASDAQ:INTC) shares shed 1.6% after Wells Fargo & Co. cut its view of the semiconductor sector to “market weight” from “overweight” for the first time in more than two years, though the firm said it was “a more moderate though still optimistic view of the sector.”
Also, Cisco Systems Inc. (NASDAQ:CSCO) shares closed 1.1% lower.
Boeing Co. (NYSE:BA) shares slid 1.3% after the company’s rival, European aircraft manufacturer Airbus, said Monday it is confident of maintaining global market share of commercial aircraft sales and expects continued expansion in air traffic demand in the Asia-Pacific region.
The Nasdaq Composite Index (NASDAQ:COMP) tumbled 1.4% to end at 2,745.63 as technology stocks lagged. The Standard & Poor’s 500 Index (CME:INDEX:SPX) shed 0.8% to 1,310.13.
Within the S&P 500, technology stocks led declines, while utilities stocks clung to slim gains.
Among the technology sector’s decliners, JDS Uniphase Corp. (NASDAQ:JDSU) dropped 6.9%, Applied Materials Inc. (NASDAQ:AMAT) shed 4.6% and Advanced Micro Devices Inc. (NYSE:AMD) lost 4.2%.
The sector was hurt not only by the analyst downgrade but also by concerns over the impact on the sector from rising energy prices.
“If you’re paying more for the transportation of your goods, you’re probably going to pay less for the technology that goes into moving your goods,” said John Canally, economist and investment strategist at LPL Financial.
Crude-oil prices continued to climb, adding $1.02 to close at $105.44 a barrel on the New York Mercantile Exchange.
Concerns remained over supply as opposition forces and soldiers loyal to Libyan leader Col. Moammar Gadhafi clashed near some of the country’s key energy installations. With no end in sight for the conflict, the oil market began to price in a much longer interruption to Libya’s production of 1.6 million barrels a day.
“What people are beginning to focus on with oil is the economic weakness that could come from a sustained rise in oil prices,” said Brian Lazorishak, portfolio manager and quantitative analyst at Chase Investment Counsel. “It’s obviously a drag on consumer spending, it can be a drag on economic growth, and everybody feels like, while the economy is showing some good signs of a recovery, it’s kind of a fragile recovery.”
Traders are particularly concerned about the situation in Saudi Arabia, where some have called for demonstrations later in the week. Societe Generale said in a research note that oil could reach $200 per barrel if supplies from Saudi Arabia were disrupted.
“Saudi Arabia’s a much bigger deal on the price of crude than Libya,” said Russell Croft, co-manager of the Croft Value Fund.
In Monday’s deal activity, Western Digital Corp. (NYSE:WDC) shares rose 16% after the company agreed to acquire Hitachi’s (NYSE:HIT) hard-disk-drive business for about $4.3 billion in cash and stock, the two companies said Monday.
Shares of radiation treatment firm TomoTherapy (NASDAQ:TOMO) soared 25% after Accuray (NASDAQ:ARAY) , the maker of a robotic system designed to treat solid tumors, said it will buy TomoTherapy for $4.80 a share in cash and stock, or a total of around $277 million. Accuray fell 10%.
Among other stocks in focus, Ciena Corp. (NASDAQ:CIEN) shares fell 10% after the network systems company’s fiscal first-quarter loss widened as a surge in operating expenses masked a bigger-than-expected jump in revenue. Ciena also forecast current-quarter revenue below estimates.
The U.S. dollar (U.S.:USDYEN) weakened against the yen but traded slightly higher against the euro (U.S.:EURUSD) . The euro was trading recently at $1.3970, down from $1.3990 late Friday in New York.
Demand for U.S. Treasurys fell, lifting yields on the 10-year note (U.S.:UST10Y) up to 3.50%.
Gold futures gained, with the April contract (COMMODITIES:GCJ11) closing at $1,434.50 an ounce.
Data on January consumer credit released Monday from the Federal Reserve showed that consumers increased their debt in January, the fourth straight month of gains.
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