Wall St hovers near record, eyes on Yellen; Cisco drops

By Rodrigo Campos

NEW YORK (Reuters) - U.S. stocks were up modestly Thursday, holding gains from late in the previous session which came ahead of the release of remarks from Federal Reserve chair nominee Janet Yellen, while a slide in Cisco shares weighed on the technology sector.

Cisco Systems shares were on track to post their worst day since February 10, 2011, slumping 12 percent to $21.11 after it warned its revenue would dive as much as 10 percent this quarter and keep contracting until after the middle of 2014.

The S&P tech sector <.SPLRCT> dropped 0.9 percent and the tech-heavy Nasdaq Composite underperformed other major indexes.

 

Wal-Mart shares fell 0.6 percent to $78.40 after the world's largest retailer reported lower-than-expected quarterly sales, and Kohl's slid 8.5 percent to $56.30 after the department store chain reported weaker-than-expected results.

Following Wednesday's close at record highs on the S&P and Dow, market sentiment was hurt by "the reality of Cisco and Walmart," said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey.

The Senate Banking Committee is holding a hearing on the nomination of the Fed's current vice chair, Janet Yellen, to head the U.S. central bank.

Yellen's remarks, released Wednesday, were perceived by the market as dovish and supportive of the policies that have helped the S&P 500 rally 24.9 percent so far this year.

"I don't expect in the Q&A (Thursday morning) to hear anything particularly surprising," said Meckler.

"This market for a while has been about a lack of alternatives for investors, that's what super low interest rates represent. We've gone a long way but it's hard to keep it going."

The Dow Jones industrial average rose 9.54 points or 0.06 percent, to 15,831.17, the S&P 500 gained 1.68 points or 0.09 percent, to 1,783.68 and the Nasdaq Composite dropped 8.046 points or 0.2 percent, to 3,957.529.

Futures barely reacted to data showing the number of Americans filing new claims for unemployment benefits fell 2,000 to a seasonally adjusted 339,000. Claims for the prior week were revised to show 5,000 more applications than previously reported.

Overseas, data showed the euro zone economy grew at a slower than expected 0.1 percent rate in the third quarter, which could hurt appetite for equities.

Fairholme Capital Management proposed to buy the insurance businesses of Fannie Mae and Freddie Mac , a move that seeks to resolve the uncertain future of the mortgage financiers.

(Editing by Bernadette Baum)