Stocks fall as tech worries steepen; investors await earnings

Stock prices declined Monday as investors continued to focus on corporate earnings reports. They were also hesitant to make major commitments prior to the president's State of the Union address Tuesday evening.

The Dow Jones industrial average traded most of the session with a triple digit loss but ended at 12,477.16, down 88.37 points. The Nasdaq composite index also finished above its lowest levels, down 20.24 points at 2,431.07.

Shares of Boeing (NYSE: BA), a Dow component, fell $3.03 to $85.60, after the shares were downgraded by a Wall Street analyst.

Oil prices traded above $53 a barrel early in the session but ended at $51.13, a loss of 86 cents. Futures trading shifted from the February to March contract. Prices usually move higher when the change is made and stabilize later in the session.

The tech sector was knocked down after Apple Inc.'s (Nasdaq: AAPL) and Intel Corp.'s (Nasdaq: INTC) outlooks last week fell below the Street's expectations.

With industry leaders like Qualcomm Inc. (Nasdaq: QCOM) and Microsoft Corp. (Nasdaq: MSFT) releasing their financial results later this week, many investors are bracing for disappointment.

"The market is nervous," said Joe Ranieri, managing director in equity trading at Canaccord Adams. "We've had a few good quarters in a row in tech land. The problem with having good quarters is, it gets harder and harder to impress."

Overall, earnings reports and economic data this year have signaled growth that's cooling, but not so quickly that it is squeezing corporate profits. This would normally be good news for the stock market, but investors have been retreating -- wisely, many market watchers say -- on signs they may have gotten ahead of themselves late last year, when the Dow began racing into record territory.

Relief about oil's decline wasn't enough to offset technology-related worries, which were kindled by analyst downgrades of Cisco Systems Inc. (Nasdaq: CSCO), the world's largest networking equipment maker; Motorola Inc., the world's second largest cell phone maker; and computer maker Dell Inc. (Nasdaq: DELL).

Cisco fell 17 cents to $26.53; Motorola fell 55 cents, or 2.9 percent, to $18.72; and Dell dropped 53 cents, or 2.1 percent, to $24.49.

Chip maker Advanced Micro Devices Inc. (NYSE: AMD) fell after rival Intel Corp. and Sun Microsystems (Nasdaq: SUNW) announced an alliance that could take away some business from Advanced Micro.

Advanced Micro, which will release its earnings Tuesday, fell 20 cents to $17.53.

If Advanced Micro's earnings report comes in better than expected, the tech sector could rebound Tuesday. Texas Instruments Inc. reported after the market closed Monday that its fourth-quarter earnings surpassed the Street estimate, and that it would slash jobs to reduce costs. The cell phone chip maker rose 53 cents to $29.12 in after-hours trading, following its 25-cent rise to close at $28.64.

Despite the market's recent aversion to technology stocks, the Dow, the S&P and the tech-dominated Nasdaq are all still up on the year. Stocks have the potential to rally, especially as earnings season winds down, Ranieri said.

"If we get through the next few weeks without distastrous earnings, some buyers will start picking up the stocks that are getting beat up now," he said.

A separate worry weighing on the market is interest rates. A report from the Chicago region's Federal Reserve indicated above-trend growth in December for the first time in four months -- yet another argument for U.S. Fed policy makers to keep rates on hold, or perhaps even hike them.

The market is in a tug of war right now over whether rates will be raised or lowered later in the year, said Jim Herrick, manager and director of equity trading at Baird & Co. "Also, some believe oil will continue to go lower, some believe oil will go back to the levels of last year ... There's two camps right now, and that's why we're having this volatility."

Pfizer Inc. (NYSE: PFE), the world's biggest drug maker, reported better-than-expected earnings but also that it is cutting 10,000 jobs in an effort to slash costs. Pfizer fell 27 cents to $26.95.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 2.65 billion shares, down from 2.84 billion shares at the same point on Friday.

The Russell 2000 index of smaller companies was down 7.20, or 0.92 percent, at 777.96.

Overseas, Japan's Nikkei stock average rose 0.66 percent. Britain's FTSE 100 was down 0.30 percent, Germany's DAX index was down 0.89 percent, and France's CAC-40 was down 0.62 percent.

The Associated Press contributed to this report.

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