). Investors also weighed Tuesday's comments from the Federal Reserve, which kept interest rates steady but warned it sees risks of weakness because of deflation.
The Dow Jones industrial average fell 27.8 points, or 0.32%, to 8,560.63. The broader Standard & Poor's 500-stock index was down 4.77 points, or 0.51%, to 929.62. Meanwhile, the tech-heavy Nasdaq composite lost 16.95 points, or 1.11%, to 1,506.76.
One bright spot in the Dow average was Coca-Cola (KO
), which jumped nearly 6% after Morgan Stanley upgraded the shares to "overweight" and said the soft drink maker's outlook has improved even though a few fundamental concerns are not completely eliminated.
The rally in tech stocks took a break after Cisco's news wasn't as cheery as hoped. After the market close Tuesday, Cisco said it earned 15 cents per share (pro forma), vs. 11 cents a year ago and a penny higher than analysts' estimate, in the quarter ending in April. Sales were $4.6 billion, down 4.2% from $4.8 billion in the year ago quarter.
The networking gear maker sees flat revenues for the July quarter from the previous quarter. However, Cisco CEO John Chambers said he is "a little more cautiously optimistic" about tech spending. Cisco shares fell about 3% on Wednesday.
In other tech earnings news, Electronic Arts (ERTS
) reported better-than-expected fiscal fourth-quarter operating EPS of 40 cents, vs. 33 cents a year ago, despite 1% lower revenue. The video game software maker said it sees breakeven first-quarter EPS on flat to slightly higher revenue.
The next key tech report will come from Electronic Data Systems (EDS
) Wednesday evening.
Companies scheduled to report quarterly earnings Thursday include Comcast (CMCSA
), Clorox (CLX
), Devon Energy (DVN
), and Nvidia (NVDA
Treasuries surged in a continuation of Tuesday's gains after the Federal Reserve expressed concerns about a fall in inflation, leaving the door open for more rate cuts. The yield on the 10-year note fell 11 basis points to 3.69%. The healthy results from the auction of 5-year notes, which was better than expected, also helped boost the market.
In the currency market, the U.S. dollar recovered against the yen and euro, after the greenback fell to 4-year lows against the euro on Tuesday. The data calendar was sparse with only wholesale trade and consumer credit.
Thursday's key economic report is weekly jobless claims. Fed Chairman Alan Greenspan will give a speech Thursday morning on corporate governance at a conference, and the minutes from the March FOMC meeting will be released at 2 pm ET.
European markets finished lower. London's FTSE 100 index was down 13.5 points, or 0.34%, to 3,992.9. In France, the CAC 40 index fell 33.6 points, or 1.1%, to 3,023.96.
In Germany, the DAX index declined 61.31 points, or 2%, to 3,005.64, amid news that German unemployment rose 44,000 to a 5-
year high of 4.46 million, while the rate moved up to 10.7% from 10.6%. Also, German factory orders fell 3.3% in March. There's hope the European Central Bank will lower rates at tomorrow's policy meeting.
Asian markets finished slightly higher. In Japan, the Nikkei index rose 26.21 points, or 0.32%, to 8,109.77. Hong Kong's benchmark Hang Seng index edged up 11.83 points, or 0.13%, to 8,901.05.