Tech Stocks in Retreat

Updated from 9:13 a.m. EST

Stocks opened lower Wednesday with tech stocks posting deep losses, following Cisco's(CSCO Quote) forward sales guidance late Tuesday.

The Dow fell 36.07 points, or 0.3%, to 10,469.11; the Nasdaq lost 25.30 points, or 1.2%, to 2040.91; and the S&P 500 dropped 4.25 points, or 0.4%, to 1131.78.

Markets overseas were mostly lower. In London, the FTSE 100 was down 0.1% at 4386, and in Germany the Xetra DAX was falling 1% to 4019. In Asia, Hong Kong's Hang Seng ended unchanged at 13,086.7 and Japan's Nikkei closed 1.8% lower at 10,447.3.

The 10-year Treasury note was recently up 2/32, yielding 4.09%. The dollar was still near a three-year low vs. the Japanese yen, lately fetching 105.37 yen. The dollar was also lower against the euro, with the European single currency worth about $1.2536.

On Tuesday, the Dow Jones Industrial Average added 6 points, or 0.1%, to 10505.18; the Nasdaq gained 3.06 points, or 0.2%, to 2066.21; and the S&P 500 closed up 0.77 points, or 0.1%, to 1136.03.

In economic news Wednesday, the Institute for Supply Management's January report on the service sector will be released at 10 a.m. EST; economists expect a reading of 60, compared with the prior month's reading of 58. Also at 10 a.m. EST, the government will release December's factory orders figures. Analysts expect an increase of 0.2% from a 1.4% decline in the prior month.

After the market closed Tuesday, Cisco reported better-than-expected earnings but said it sees a 1% to 3% sequential rise in sales in the third quarter. Shares of the company dropped on fears that tech spending has not improved as much as previously thought.

The company reported second-quarter earnings of $1.29 billion, or 18 cents a share, before a charge, which was a penny ahead of the consensus estimate. Shares of Cisco were dropping $1.29, or 4.9%, at $25.12 in Wednesday premarket trading.

Oracle (ORCL Quote) boosted its bid for PeopleSoft (PSFT Quote) to $26 a share, or about $9.4 billion. The tender offer is an 18.8% premium to the closing price of PeopleSoft shares Tuesday, and will expire at midnight on March 12. Oracle shares were falling 61 cents, or 4.4%, to $25.15, and PeopleSoft was up $2.16, or 9.9%, to $24.05.

Northrop Grumman (NOC Quote) narrowly beat analyst expectations, earning $1.11 a share in its quarter, a penny ahead of expectations. The company's profit slipped from $1.73 last year, despite a 46.9% surge in revenue.

Harrah's(HET Quote) said Wednesday that it earned 50 cents a share in the fourth quarter, excluding items, compared with analysts' projections for 53 cents a share. Revenue was up 3.6%.

PepsiAmericas(PAS Quote) had fourth-quarter earnings of 23 cents a share, excluding items, beating analysts' consensus for 19 cents a share. Total sales were up 8%.

And Oxford Health(OHP Quote) said it had a profit of $1.14 a share in the fourth quarter, on a 6% increase in sales. Analysts had been expecting $1.07 a share.

In research, UBS initiated coverage of Sun Microsystems(SUNW Quote) with a neutral rating and Merrill Lynch reinstated coverage of Yahoo!(YHOO Quote) with a neutral rating.