Cisco Can't Stop Selloff

Tech shares got an early bid, but at the end of the day the major averages were lower.
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Updated from 4:09 p.m. EST

The

Dow Jones Industrial Average

ran out of steam after three straight sessions of gains, and even an upbeat forecast from

Cisco

(CSCO) - Get Report

couldn't keep buyers in the tech space Thursday.

The

Nasdaq Composite

was higher for much of the day, but ended down 8.93 points, or 0.37%, to 2376.01.

The

S&P 500

was down 7.39 points, or 0.53%, at 1378.33, and the Dow fell 73.24 points, or 0.6%, to 12,103.30, pressured by 3% declines in

Merck

(MRK) - Get Report

and

Pfizer

(PFE) - Get Report

.

Ken Tower, chief market strategist with CyberTrader, said the bulls were due for a rest.

"Despite yesterday's new highs in the Dow and Nasdaq, the market continues to show a loss of momentum," he said. "The potential decline of a normal correction within a low-volatility environment -- exactly what we have now -- is in the 3% to 5% range."

Robert Pavlik, chief investment officer with Oaktree Asset Management, argued that "many market participants feel that the worries of an overbought correction may be over as the last several weeks has allowed the market to consolidate at a level without giving back many of the gains. Overall, the feeling is positive and the outlook is optimistic."

About 2.54 billion shares changed hands on the

New York Stock Exchange

. Decliners beat advancers by a 10-to-7 margin. Volume on the Nasdaq was roughly 2.41 billion shares, with losers outpacing winners 2 to 1.

By sector, commodity stocks were the big winners of the session, as the Philadelphia Gold & Silver Index was higher by 4.3%.

Health care and biotech stocks were hit hardest amid fears that Democrats will change Medicare prescription benefits so the government can negotiate lower drug prices directly with drugmakers. The Nasdaq Biotech Index fell 2%, and the Nasdaq Health Care Index dropped 1.9%

The main driver of an early tech advance was Cisco, whose shares jumped after Wednesday's close when the networker lifted its revenue guidance, in part thanks to its acquisition of Scientific-Atlanta.

For the fiscal first quarter, the company earned $1.61 billion, or 26 cents a share, up from last year's $1.26 billion and 20 cents a share. Revenue rose to $8.18 billion from $6.55 billion a year earlier. Excluding items, its profit would have been 31 cents a share, 2 cents better than expected.

Shares of Cisco surged $1.61, or 6.4%, to finish at $26.71.

U.S. stocks were coming off a session in which they started sluggish but closed higher as investors shook off fears about the power shift in Congress. The Dow rose to another all-time high, gaining 19.77 points to 12,176.54, with support from

Altria

(MO) - Get Report

and

Exxon Mobil

(XOM) - Get Report

.

As the new day unfolded, media company

Viacom

(VIA) - Get Report

posted a third-quarter earnings beat and reaffirmed its targets, and defense contractor

Northrop Grumman

(NOC) - Get Report

lifted its revenue forecast.

Retailer

J.C. Penney

(JCP) - Get Report

posted third-quarter earnings of $287 million, or $1.26 a share, up 23% from a year ago and also ahead of the Thomson First Call average estimate of $1.23 a share. The stock gained $1.55, or 2%, to $79.75.

Outside of earnings,

3M

(MMM) - Get Report

has agreed to sell its branded pharmaceuticals operation to a group of buyers in a $2.1 billion deal. Shares lost 52 cents, or 0.7%, to close at $78.90.

Wal-Mart

(WMT) - Get Report

said it will start accepting

MasterCard

(MA) - Get Report

credit cards as a form of payment in its Sam's Club wholesale stores. Previously, Sam's Club only accepted Discover credit cards and its own in-house cards. MasterCard reversed early strength and lost 0.1% to $88.40, while Wal-Mart fell by 1.3% to $46.41.

Away from equities, the Commerce Department said the U.S. trade deficit narrowed to $64.3 billion in September, the lowest level since April, from a revised $69 billion in August. Exports for the month totaled $123.2 billion, and imports were $187.5 billion.

In addition, the Labor Department said its import price index dropped 2% in September, compared with economists' expectations of a 1% decline. Imported petroleum prices plummeted 8.3% during the month. Excluding petroleum, import prices were down 0.6%.

The government also said initial jobless claims fell by 20,000 to 308,000 last week. The less volatile four-week moving average fell to 311,250 claims.

The University of Michigan's preliminary read on consumer sentiment for November fell to 92.3 from 93.6 in October. The data came in slightly below economists' estimates.

The benchmark 10-year note was up 1/32 in price to yield 4.63%, and the dollar was mixed against the world's other major currencies. Gold futures jumped $18.50 to $636.80, and crude oil futures spiked $1.33 to close at $61.16 a barrel.

Overseas, stocks were mixed. London's FTSE 100 was down 0.2% to 6228, and Frankfurt's Xetra DAX tacked on 0.1% to 6356. The Nikkei dipped by 0.1% to 16,198, and the Hang Seng rose 0.8% to 18,952.