Dow off 120 as oil jumps, techs fall

By Charley Blaine and Elizabeth Strott

Weakness in technology stocks and a jump in energy prices pushed the major indexes lower in a maddeningly volatile day of trading.

At the close, the Dow Jones industrials were down 120 points, or 1%, to 12,302 -- the Dow's second loss of 100 points or more in a row -- and the Standard & Poor's 500 Index dropped about 15 points, or 1.2%, to 1,326.

Tech stocks pulled the Nasdaq Composite Index down 44 points, or 1.9%, to 2,281. The group was jolted by investors' response to Oracle's (ORCL, news, msgs) quarterly earnings report and by weakness in Internet search giant Google (GOOG, news, msgs). Large tech stocks all moved lower and the Nasdaq-100 Index ($NDX.X) was down 39 points, or 2.2%, to 1,778.

Oracle tumbled 7.2% to $19.43, the second-worst performance among Nasdaq-100 stocks and sixth-worst among S&P 500 stocks. Google fell 3.1% to $444.08, bringing its loss in 2008 to nearly 36%. Oracle is down about 14% on the year.

Apple (AAPL, news, msgs) was down 3.3% to $140.25, and BlackBerry maker Research In Motion (RIMM, news, msgs) was off 5.1% to $112.15. Microsoft (MSFT, news, msgs) fell 1.8% to $28.05, and Cisco Systems (CSCO, news, msgs) slipped 2.4% to $24.18. (Microsoft is the publisher of MSN Money.)

Crude oil in New York jumped nearly 2% to $107.16 a barrel this afternoon after briefly crossing above $108 a barrel after an attack on an oil pipeline in Iraq. Energy stocks were higher for most of the day but fell back at the close.

Dow components ExxonMobil (XOM, news, msgs) and Chevron (CVX, news, msgs) were both lower at $86.20 and $84.40, respectively. Chesapeake Energy (CHK, news, msgs), which is primarily a natural producer, fell 2.7% to $46.10.

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The losses appear to halt the rally that began early last week in response to the Federal Reserve's actions to prop up the financial markets by helping JPMorgan Chase cut a deal to buy crippled investment bank Bear Stearns (BSC, news, msgs).

Shares of investment bank Lehman Bros. (LEH, news, msgs) fell 8.9% to $38.71 in extremely heavy trading on concern about the company's ability to survive the current credit crisis. Lehman officials pointedly insisted their financial position was still strong.

The trading in Lehman Bros. shares and options was similar to but not as extreme as the trading that took down Bear Stearns, OptionMonster.com's Jon Najarian said in a note to clients.

Energy prices -- New York close

	Thur.	Wed.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$107.58	$105.90	$1.68	5.64%	12.09%
Heating oil (per gallon)	$3.1483	$3.0438	$0.1045	10.87%	18.83%
Natural gas (per million BTU)	$9.5780	$9.5720	$0.0060	2.10%	28.00%
Unleaded gasoline (per gallon)	$2.7163	$2.7429	-$0.0266	8.12%	9.05%

Bailing out of Bear Stearns

Late in the day, Bear Stearns disclosed that Chairman Jimmy Cayne and his wife sold all of their shares in the company, about 5.7 million shares, at $10.84 a share, or a total of $61.3 million before taxes.

In January 2007, when Bear shares peaked at $171.51, the couple's stake had been worth as much as $970 million. That means their loss had been nearly 94%.

Cayne's sale was made on Tuesday, right after JPMorgan boosted its all-stock offer for Bear Stearns from $2 a share to $10.

Bear Stearns had closed at $11.23 in regular New York Stock Exchange trading. But they tumbled more than 5.4% to $10.62 after the news on Cayne's sale.

• Video: More on Jimmy Cayne's sale of Bear Stearns shares

Traders suggested the Caynes' sale -- and the market's reaction to the news -- is a strong signal that the odds that JPMorgan will sweeten its offer for Bear Stearns are next to none.

Oracle sees some economic weakness

Oracle's report sent investors into a tizzy because of a perceived weakness in sales. While Oracle's overall revenue rose 20% to $5.3 billion, sales of new software, an indicator of future growth, rose 16% to $1.62 billion, below the company's previous forecast of 25% growth.

The earnings were good. Oracle earned $1.3 billion, or 26 cents per share, up from $1 billion, or 20 cents per share, in the same quarter a year ago. Excluding items, Oracle earned 30 cents per share, in line with the consensus estimate.

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"Customers got a little more cautious toward the end of the quarter," Oracle Chief Financial Officer Safra Catz said.

Oracle said license sales for new applications rose 6.6% to $451 million, disappointing some analysts.

"The applications business is definitely very weak. That makes me worry about what software (results of other companies) will look like for the March quarter," Goldman Sachs analyst Sarah Friar told Reuters. "I think this is definitely going to spook the market."

Oracle said it expects to earn between 43 and 44 cents per share in the current quarter; the consensus estimate is 44 cents per share.

Google's weak clicks

Google shares fell on disappointing news about growth in its paid clicks last month.

Data from Internet information company comScore, which turned up in a JPMorgan research report, showed that Google's paid clicks rose 3% in February from a year ago and down 3% from January.

The weaker-than-expected data suggest that Google, too, is vulnerable to the recent pressures of the economic slowdown, The Wall Street Journal said.

Still, Bank of America analyst Brian Pitz says not to worry.

"While Google's February paid-click data does little to calm investor fears of a slowdown in Google's core business, we believe most of the deceleration is due to the continuing quality initiatives by the company itself, which should drive significant upside longer-term," Pitz wrote in a note to clients.

"Moreover, we caution investors against reading too much into comScore numbers as they have historically been a bit noisy."

Meanwhile, Lehman Bros. this morning lowered its price target on the stock to $580 from $644. ThinkEquity lowered its target on the shares as well -- to $600 from $700.

Google shares have fallen nearly 36% this year and are off more than 40% since peaking in November.

Merrill Lynch, UBS estimates slashed

Oppenheimer analyst Meredith Whitney, who has been spectacularly right in saying earnings for Citigroup (C, news, msgs) were going to be spectacularly bad, cut her first-quarter estimates for investment houses Merrill Lynch (MER, news, msgs) and UBS (UBS, news, msgs).

The cuts came late Wednesday, just hours she cut her outlook on Citigroup. Whitney now expects Merrill to lose $3 per share, far lower than the previous forecast of 45 cents per share in profit; she also lowered UBS's estimate to a loss of $2.75 per share, down from previous expectations for profit of 72 cents per share.

• Video: Meredith Whitney discusses the woes of big banks

"We expect the brokers and banks to take another round of write-downs on their mortgage-related positions," Whitney wrote in a note to clients.

Shares of Merrill fell 5.7% to $41.90 on the day; UBS shares were down slightly to $29.13. Citigroup shares were down 1.2% to $21.79.

At least a dozen analysts have reduced profit estimates in the past six weeks for the biggest banks and securities firms on expectations of more writedowns related to the collapse of the subprime mortgage market, Bloomberg News said today. Credit losses for banks worldwide already total about $208 billion.

Continued: Clear Channel wins a round against the banks

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