Software Stocks Struggling Following J.P. Morgan Downgrades

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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%.