NEW YORK – Stocks tumbled Thursday after a disappointing outlook from Cisco Systems Inc. rattled a market already on edge as an economic summit of world leaders got under way in South Korea.

Global leaders were sharply divided over currency and trade policies heading into the Group of 20 summit meeting in Korea, and a sense of pessimism was hanging over the start of the meeting of top officials from rich and emerging economies.

The Dow Jones industrial average fell 73.94, or 0.7 percent, to close at 11,283.10, after trading down as much as 126 earlier in the day. The index fell for three out of the last four sessions.

Cisco disappointed investors when it cut its sales forecast for the second quarter in a row, sending its shares down 16.2 percent to $20.52. That dragged down shares of other technology stocks and other Dow components. Hewlett-Packard Co. fell 2.4 percent, while IBM Corp. fell 0.8 percent.

“Cisco is clearly a tech benchmark,” said Philip Dow, director of equity strategy at RBC Wealth Management. “With a second disappointment in a row, people are questioning if their business model is broken.”

The computer network equipment maker said its revenue will rise by less than half of what analysts had predicted for its November-through-January quarter. There are worries that smaller competitors are cutting into Cisco’s market share.

Technology shares have been among the best performing in recent months with more companies investing in new technology coming out of the recession. Cisco’s cautious forecast puts a damper on expectations for broader growth in the sector in the coming quarters.

The Standard & Poor’s 500 index fell 5.17, or 0.4 percent, to 1,213.54. The Nasdaq composite dropped 23.26, or 0.9 percent, to 2,555.52.

Volume was a bit lighter than in recent days because of the Veterans’ Day holiday. Bond trading was closed for the holiday.

Investors were cautious as global leaders began an economic summit in South Korea, where the United States has received a cool reaction from other nations over its economic stimulus plan. China and Germany were critical of the United States last week after the Federal Reserve announced a bond-buying program that effectively cut the value of the dollar.

 

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