Software Stocks Struggling Following J.P. Morgan Downgrades

Software stocks were struggling in early trading after J.P. Morgan downgraded many stocks in the sector and lowered estimates on the whole group as a result of a worsened economic outlook.

J.P. Morgan downgraded

Quest Software

(QSFT)

and

Websense

(WBSN)

to long-term buy from buy, and downgraded

Embarcadero

(EMBT)

and

Red Hat

(RHAT)

to market performer from long-term buy.

Quest was down 2.5%, Websense was down 5.5%, Embarcadero was down 10.3% and Red Hat was down 3%.

J.P. Morgan said several stocks remained favorites despite the potential for continued sector weakness, including

Microsoft

(MSFT) - Get Report

,

NetIQ

(NTIQ)

and

Mercury Interactive

(MERQ)

.

Microsoft was down 4.9%, NetIQ was down 7.3% and Mercury was down 3.2%.