* ADP report shows unexpected cut in private payrolls
* Equinix slides after revenue warning
* Semis drag Nasdaq down after Morgan Stanley downgrades
* Dow up 0.2 pct, S&P off 0.1 pct, Nasdaq off 0.8 pct
* For up-to-the-minute market news see []
(Updates to close)
By Leah Schnurr
NEW YORK, Oct 6 (Reuters) - Tech shares slumped on
Wednesday, hit by worries about demand for semiconductors and
data storage.
The Nasdaq bore the brunt of the day's selling, led by data
system services provider Citrix Systems <CTXS.O>. The stock was
down in sympathy with small-cap Equinix Inc <EQIX.O>, which
plunged 33.1 percent to $70.34 after it issued a revenue
warning late Tuesday. Citrix slid 14.1 percent to $60.15.
"You are starting to see a natural rotation and some profit
taking in the cloud computing sector that has been red hot in
the last few months," said TD Ameritrade chief options
strategist Joe Kinahan in Chicago.
"So those investors that currently own Citrix are
reconsidering the valuation at these levels."
Another blow to tech came from Morgan Stanley's downgrade
of semiconductor companies Xilinx Inc <XLNX.O> and Altera Corp
<ALTR.O> to "underweight" on concerns about a slowdown in Asian
markets. Both fell more than 2 percent. For details, see
[]
The broader market, meanwhile, was hamstrung by a poor
reading on private-sector employment and speculation about
further quantitative easing from the Federal Reserve.
The ADP Employer Services report said private payrolls fell
by 39,000 in September, underscoring concerns about the weak
labor market. But at the same time, it was a positive factor
for market players anticipating more efforts from the central
bank to boost the economy.
The Dow Jones industrial average <> added 22.93 points,
or 0.21 percent, to 10,967.65. The Standard & Poor's 500 Index
<.SPX> inched down 0.78 of a point, or 0.07 percent, to
1,159.97. The Nasdaq Composite Index <> dropped 19.17
points, or 0.80 percent, to 2,380.66.
Xilinx lost 2.4 percent to $25.71 and Altera fell 2.3
percent to $29.30. The PHLX Semiconductor Index <.SOX>, known
as the SOX, dropped 1.6 percent, its biggest slide in a month.
The index has eased since the start of the month after surging
more than 13 percent in September.
Equinix was among the 10 most heavily traded companies on
the Nasdaq, putting it among much larger companies such as
Intel Corp <INTC.O> and Cisco Systems <CSCO.O>. Equinix was
also the Nasdaq's biggest percentage loser. More than 30
million shares changed hands, while the stock's 50-day average
volume is 738,489.
The ADP report came ahead of Friday's larger employment
report from the government. Non-farm payrolls are forecast to
come in unchanged on Friday, according to Reuters data, though
private payrolls are expected to add 75,000. []
[]
"I think it's a 'win-win' for the market on Friday," said
Bruce Bittles, chief investment strategist at Robert W. Baird &
Co in Nashville.
"If the report comes in weaker than expected, it will
prompt the thinking that the Federal Reserve will begin
quantitative easing sooner than later and be more aggressive.
If the report comes in stronger than expected, it means the
economy might be doing a little better."
On the earnings front, Yum Brands Inc <YUM.N> gained 1.2
percent to $47.36 after reporting adjusted third-quarter
earnings that beat expectations by a penny. []
Alcoa <AA.N> will mark the unofficial start to earnings
season on Thursday. Alcoa shot up 1.8 percent to $12.37.
[]
(Reporting by Leah Schnurr; Additional reporting by Doris
Frankel; Editing by Jan Paschal)
