* Cisco shares tumble after results, outlook
* Egypt's Mubarak likely to quit Thursday -officials
* US jobless claims fall more than expected in latest week
* Indexes down: Dow 0.3 pct, S&P 0.2 pct, Nasdaq 0.3 pct
* For up-to-the-minute market news see []
(Updates to afternoon trading, changes byline)
By Ryan Vlastelica
NEW YORK, Feb 10 (Reuters) - U.S. stocks were lower on
Thursday and the Dow was on track to snap an eight-day rally,
but hopes for a possible resolution in Egypt to the political
unrest that has gripped the country for more than two weeks
helped equities pare earlier losses.
Stocks started the session lower after tech bellwether
Cisco Systems Inc <CSCO.O> gave a weak outlook and reported
eroding margins, stoking fears about falling public sector
spending and increasing competition.
Cisco shares stock tumbled more than 13 percent to $19.09
on volume that was about four times its three-month daily
average volume. It was the top percentage decliner on both the
Dow and the Nasdaq 100 <>. For details, see
[]
The shares could suffer even more if government spending
continues to be weak, said James Russell, managing director of
the Washington, D.C.-based Collingwood Group.
"Cisco is a large government contractor, and if spending
there goes the stock is going to drop pretty heavy," Russell
said. "We've seen tech spending rise elsewhere and it's
difficult to digest the fact that we're not seeing it at
Cisco."
Equities came off earlier lows as Egyptian President Hosni
Mubarak looked likely to step down. The more than two weeks of
civilian unrest in the country have pressured U.S. equities on
fears that political instability could spread in the Middle
East and North Africa and its possible impact on commodities.
[]
"The fact that he might be leaving early is good, it's a
concession to the protesters that will hopefully be
stabilizing," said Alec Young, equity strategist at S&P Equity
Research in New York. "But there can't be a power vacuum. You'd
rather have Mubarak than lawless chaos."
The Dow Jones industrial average <> was down 39.40
points, or 0.32 percent, at 12,200.49. The Standard & Poor's
500 Index <.SPX> was down 2.81 points, or 0.21 percent, at
1,318.07. The Nasdaq Composite Index <> was down 7.76
points, or 0.28 percent, at 2,781.31.
Also weighing on the Dow was Wal-Mart Stores Inc <WMT.N>,
which fell 2.1 percent to $55.54 after UBS downgraded the stock
to "neutral" from "buy." UBS said a sales recovery at the
retail giant could take longer than expected. []
With the Dow and S&P up 5 percent so far this year, some
traders said the market was poised for a short-term
correction.
According to Larry McMillan of McMillan Analysis Corp, 93
percent of traders in an industry survey were bullish on the
S&P 500 futures on Tuesday, but the number fell to 90 percent
at Wednesday's close. A drop below 90 percent, accompanied by a
down day in the market, would be a sell signal.
New U.S. claims for unemployment benefits dropped to their
lowest in 2-1/2 years, the government said on Thursday, in a
sign the labor market was improving. []
"We're seeing continued declines in claims, that's where I
hang my hat and say there's evidence companies are starting to
hire," Russell said. "That's a very good sign."
Disappointing earnings overseas hurt sentiment as Credit
Suisse <CSGN.VX><CS.N> missed profit expectations. The bank's
U.S.-traded shares dropped 7.4 percent to $43.21 while Deutsche
Bank <DB.N> fell 2.8 percent to $62.46 on the New York Stock
Exchange.
Soft drink and snacks maker PepsiCo Inc <PEP.N> cut its
full-year earnings growth target, sending its shares down 1.8
percent to $63.29.
(Editing by Leslie Adler)
