Stocks inch mostly higher, Cisco drags tech lower

NEW YORK Major market indexes are edging mostly higher on Wall Street in early trading Thursday, but a sales slump at network equipment maker Cisco Systems (CSCO) dragged other technology stocks lower.

The Dow Jones industrial average inched up two points to 15,824 in the first hour of trading.

Cisco reported quarterly sales after the closing bell Wednesday that were well below what analysts were expecting. Cisco is considered a technology industry bellwether because the company manufacturers the equipment that makes up the backbone of the Internet: routers, servers, fiber optics, etc. Its results are also seen as a proxy for business spending on technology.

Cisco also said revenue for the current quarter could fall as much as 10 percent from a year ago. The company's chief executive, John Chambers, blamed the 16-day partial government shutdown last month as well as the near-breach of the nation's borrowing limit as reasons why business was down.

"The shutdown, debt ceiling negotiations and delay of key decisions exasperated the lack of confidence among business leaders we had highlighted over the past few quarters," Chambers said in a conference call with analysts.

Cisco sank $3, or 12 percent to $21.01, pulling other large technology companies down with it. IBM fell $2.66, or 1.6 percent, to $180.90 and Hewlett-Packard lost $1.47, or 5.5 percent, to $25.03.

The Standard & Poor's 500 index was up two points, or 0.1 percent, to 1,783 and the Nasdaq composite lost 8 points, or 0.2 percent, to 3,955.

Investors also had their ears turned to Washington, D.C., where Janet Yellen, who has been nominated to replace Ben Bernanke as the lead of the Federal Reserve, will testify in front of the Senate Banking Committee this morning.

In her prepared remarks, Yellen made no indication she would deviate from the low-interest rate policy that the outgoing chairman, Ben Bernanke, championed.

"The Federal Reserve is using its monetary policy tools to promote a more robust recovery," Yellen said in her prepared testimony. "I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy."

Yellen also said she supported Bernanke's push to make the central bank more transparent, saying "monetary policy is most effective when the public understands what the Fed is trying to do and how it plans to do it."

The big question investors have for Yellen is where she stands on the future of the Fed's $85 billion-a-month bond-buying program, which is designed to keep interest rates low and stimulate the economy by encouraging borrowing and hiring. The Fed was widely expected to start pulling back its bond purchases back in September, but surprised markets by deciding to stay the course.

The next time the Fed could vote to change its stimulus program is in mid-December. Many analysts expect that the Fed won't make any changes to its policy until early next year.

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