Techs rattle Wall Street

Technology stocks took Wall Street sharply lower after Qualcomm and Motorola disappointed investors. Shares in Apple fell, adding to the gloom, as its new iPad tablet computer was harshly criticised by some bloggers.

At midday US time, the Dow Jones Industrial Average had shed 1.52 per cent and the S&P 500 was down 1.58 per cent. The Nasdaq Composite fell 2.3 per cent.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street's 'fear gauge' rose 7.7 per cent to 24.92.

Shares in Motorola plunged 14 per cent after the largest US mobile-phone maker shipped far fewer phones in its latest quarter than a year earlier: 12 million versus 19.2 million. The company today said it would post a fiscal first-quarter loss of US1 cent a share, compared with analysts' expectations of a US3 cent profit.

The world's biggest maker of mobile-phone chips, Qualcomm, today cut its 2010 sales outlook and forecast that its second-quarter profit would fall short of estimates. Its stock also plunged 14 per cent.

Shares in Apple fell 4.3 per cent as bloggers unleashed on what they believe were missed opportunities with the iPad. Still, not everyone saw the tablet in the same light. Piper Jaffray & Co's Gene Munster told Bloomberg that the iPad was "an amazing device" and that investors needed to be patient.

Munster said it could take a year for the iPad to become Apple's next "breakout" product. He also said Apple might need to lower the price to between US$300 and US$400 from the initial US$499. The iPad will go on sale in March.

Among other active issues, Eastman Kodak surged 20 per cent, Cardinal Health was up 6.55 per cent, Netflix gained 22 per cent, Procter & Gamble rose 2.9 per cent and Time Warner Cable increased 5.4 per cent.

In Europe, the Dow Jones Stoxx 600 fell 1.1 per cent to 244.61. The FTSE 100 fell 1.37 per cent, Germany's DAX dropped 1.82 per cent and France's CAC 40 lost 1.89 per cent.

Among the big movers, BHP Billiton fell 2.4 per cent, ArcelorMittal shed 3.7 per cent and AstraZeneca fell 4.6 per cent. Swedish retailer H&M advanced 8.4 per cent on higher than expected net income and Nokia surged 9.9 per cent as it reported better than expected profits and sales.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.26 per cent to 78.88.

The euro dropped 0.3 per cent to US$1.3984 in New York, after reaching US$1.3938, the lowest level since July 14. The euro decreased 0.6 per cent to 125.50 yen, from 126.25. The dollar dropped 0.2 per cent to 89.78 yen, from 90.

"There's definitely fear of systemic risk within the euro zone right now," Amelia Bourdeau, a currency strategist at UBS AG in Stamford, Connecticut, told Bloomberg amid heightened concerns about budget woes in Greece and Portugal.

Prime Minister George Papandreou told Bloomberg in an interview in Davos that Greece was being victimised by rumours in financial markets as he denied seeking to borrow from European partners to finance the country's budget deficit.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.38 per cent to 267.73.

Gold eased as the dollar rose amid the euro's slide. Spot gold was bid at US$1088.35 an ounce at 1450 GMT, against US$1087.25 late in New York on Wednesday. The precious metal had risen as high as US$1095.95 an ounce in earlier trade.

The China Gold Association said Chinese gold output increased 11.34 per cent to a record 313.98 tonnes in 2009, securing the country's position as the world's largest producer of the yellow metal.

Silver rose to US$16.55 versus US$16.54. Holdings of the world's largest silver exchange-traded fund, the iShares Silver Trust, rose 0.5 per cent to 9384.98 tonnes on January 27, it said.

A Reuters poll published on Wednesday showed platinum and palladium are expected to outperform other precious metals this year, with a new wave of investor demand boosting prices in anticipation of increased industrial use.

Platinum was at US$1509 an ounce against US$1502.50, while palladium was at US$422 against US$411.50.