* Tech shares tumble as investors lock in profits
* Poor bond auction fuels worry about public finances
* IBM, HP among Dow's drags; Apple weighs on Nasdaq
* Dow off 1.2 pct; S&P 500 off 1.3 pct; Nasdaq off 2.4 pct
* For up-to-the-minute market news click []
(Updates to close)
By Ellis Mnyandu
NEW YORK, May 7 (Reuters) - U.S. stocks slid on Thursday as
investors took profits from the technology sector's recent
surge, while analyst downgrades hurt telecoms and a tepid
response to a government bond auction raised fears about public
finances.
Bank stocks also succumbed to profit-taking, a day after
leaked results from so-called stress tests suggested that most
U.S. banks were healthier than previously thought. Results of
the test are expected at 5 p.m. EDT (2100 GMT) after the bell
on Thursday.
Investors worried that poor demand for government debt
could raise the cost of capital and hamper chances of a U.S.
economic recovery. For details, see []
U.S. debt prices slid, sending the 30-year Treasury bond
yield to its highest since November.
"The auction is big news because now it's showing that
maybe the Chinese don't want our bonds. If the cost of capital
for the United States becomes more expensive, then the
recession is going to take that much longer to get out of,"
said Joe Saluzzi, co-manager of trading at Themis Trading in
Chatham, New Jersey.
Shares of International Business Machines Corp <IBM.N>,
down 2 percent to $102.59, were the Dow's top drag, while Apple
Inc <AAPL.O>, off 2.6 percent, pressured the Nasdaq.
The semiconductor index <.SOXX> fell 6 percent, but is
still up 33.6 percent since the broader market's 12-year low of
March 9. Tech has provided a crucial underpinning of the
market's run-up since then, along with bank stocks.
The Dow Jones industrial average <> dropped 102.43
points, or 1.2 percent, to 8,409.85. The Standard & Poor's 500
Index <.SPX> slid 12.14 points, or 1.32 percent, to 907.39. The
Nasdaq Composite Index <> fell 42.86 points, or 2.44
percent, to 1,716.24.
The $14 billion Treasury bond auction met below-average
demand from investors, who bid aggressively to force the
government to pay a higher yield as it pushed ahead with plans
to help finance its burgeoning budget deficit with more
longer-term debt.
Other tech casualties were Hewlett-Packard <HPQ.N>, off 5
percent at $34.53, Qualcomm <QCOM.O>, down 3.2 percent to
$42.34. Shares of networking equipment maker Cisco Systems
<CSCO.O> fell 3.4 percent to $18.95 despite the company posting
a stronger-than-expected quarterly profit late on Wednesday.
[]
Among banks stocks, shares of Citigroup <C.N> shed 1.3
percent to $3.81, while JPMorgan <JPM.N> slid 5.3 percent to
$35.24. Wells Fargo <WFC.N> shares fell 7.8 percent to $24.76,
and after the bell the bank announced a $6 billion common stock
offering. The KBW Bank index <.BKX> dropped 3.5 percent.
Other standout casualties were homebuilders, with the Dow
Jones home construction index <.DJUSHB> off 6 percent. Shares
of big manufacturers were also hit hard, with Caterpillar Inc
<CAT.N> sliding 5.2 percent to $37.92.
At Thursday's closing, the S&P 500 showed a gain of 34.1
percent from the March 9 low, paring back from the rise of 36
percent it had through Wednesday session.
But Wal-Mart Stores Inc <WMT.N> bucked the trend after
posting stronger-than-expected April sales. The stock rose
nearly 1 percent to $49.89. Other gainers were shares of
healthcare companies, considered better positions to ride out
economic downturns.
Johnson & Johnson <JNJ.N> was the Dow's top boost, ending
up 1.3 percent at $54.89.
