Wall Street slips as Cisco drags, bond yields rise

(Reuters) – Wall Street’s main indexes dropped on Thursday as U.S. bond yields climbed to a seven-year high and Cisco’s forecast disappointed, while looming Sino-U.S. trade talks added to the jitters.

FILE PHOTO: Traders and guests gather for the IPO of PermRock Royalty Trust on the floor of the New York Stock Exchange (NYSE) in New York, U.S., May 2, 2018. REUTERS/Brendan McDermid

Shares of Cisco (CSCO.O) fell 3.6 percent and were the biggest drag on all the three major indexes, after the company’s forecast indicated its transition to a software-focused business was a work in progress.

Also weighing was Walmart’s (WMT.N) 1.8 percent fall. The stock was up in premarket trading after the retailer posted a rebound in its U.S. e-commerce business and beat profit estimates.

Ten-year U.S. Treasury yields US10YT=RR hit a high of 3.1 percent as more expensive oil pointed to faster inflation and followed some upbeat U.S. retail sales numbers.

“There’s a lot of chatter that the 10-year is somehow going to explode to the upside, that’s why its getting everybody’s attention,” Kim Forrest, senior portfolio manager at Fort Pitt Capital Group in Pittsburgh.

“There is a lot of worry out there that might be reflected in the market … and trade is the icing on the cake.”

The United States and China will resume negotiations over the next two days to resolve their differences over trade, and officials from both sides have recently signaled that they are looking for a deal.

Japan is considering tariffs on U.S. exports worth $409 million in retaliation against U.S.-imposed steel and aluminum import tariffs, according to media reports.

At 9:52 a.m. EDT the Dow Jones Industrial Average .DJI was down 61.23 points, or 0.25 percent, at 24,707.70, the S&P 500 .SPX was down 2.02 points, or 0.07 percent, at 2,720.44 and the Nasdaq Composite .IXIC was down 8.43 points, or 0.11 percent, at 7,389.86.

Six of the 11 main index groups were in negative territory.

Leading the gainers was the energy sector .SPNY, which rose 0.9 percent after Brent crude LCOc1 prices hit $80 per barrel for the first time since November 2014. [O/R]

Wells Fargo (WFC.N) dropped 1.3 percent, weighing on financials .SPSY, after the Wall Street Journal reported that some bank employees altered information on business customers’ documents.

J.C. Penney Co tumbled 6.7 percent after its same-store sales missed estimates and the company warned its could post a loss this year.

Coca-Cola (KO.N) rose 1.4 percent after Barclays upgraded the stock to “overweight.”

Advancing issues outnumbered decliners by a 1.54-to-1 ratio on the NYSE. Advancing issues outnumbered decliners by a 1.51-to-1 ratio on the Nasdaq.

The S&P index recorded 12 new 52-week highs and two new lows, while the Nasdaq recorded 48 new highs and 11 new lows.

Reporting by Medha Singh in Bengaluru; Editing by Anil D’Silva

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