(In paragraph 13, please read "Labor Department report" instead of "Labor Department's report". Corrects typographical error.)
By Sinéad Carew and Shristi Achar A
(Reuters) -The Dow Jones Industrial Average closed down slightly on Thursday, with pressure from Cisco and Walmart after disappointing forecasts.
Shares of Cisco Systems tumbled as the communications and networking technology company cut its full-year revenue and profit forecasts on slowing demand for its networking equipment. Also in technology, Palo Alto Networks shares fell after its forecast late Wednesday for second-quarter billings that missed expectations.
Walmart shares sank a day after touching a record high. The retail giant said U.S. consumers were spending cautiously because of inflation, even as it raised its annual forecast for sales and profit.
This helped push the broader S&P 500 consumer staples index lower and weighed on other retailers including Dollar General and Dollar Tree.
Also, Target gave back some gains from the previous session in which it soared 17.8% after providing a bullish strong holiday-quarter outlook.
Wall Street's three main indexes had advanced in the four prior sessions, with data signaling cooling U.S. inflation and fueling hopes the U.S. Federal Reserve is done hiking interest rates. Also, passage this week of a stop-gap bill to avert a government shutdown eased some nerves.
After days of gains, investors took the opportunity to take a step back, according to Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
"Immediate weakness is profit taking and a drawdown based on Cisco systems, Walmart and Palo Alto," said Pavlik.
Given that Cisco and Walmart are "a backbone of their respective industries", Paul Nolte, senior wealth adviser and market strategist at Murphy & Sylvest said their weakness "calls a little bit into question the health of the consumer and maybe the health of the technology sector."
According to preliminary data, the S&P 500 gained 5.64 points, or 0.13%, to end at 4,508.52 points, while the Nasdaq Composite gained 10.75 points, or 0.08%, to 14,114.59. The Dow Jones Industrial Average fell 44.12 points, or 0.13%, to 34,944.65.
"The big driver today is the tug-of-war between those who want to sell on rallies and those who want to buy on dips," said Brian Jacobsen, chief economist at Annex Wealth Management.
"Economic data hasn’t been bad enough to trigger too many recession fears, but it hasn’t been good enough to engender too much enthusiasm. We’re entering a period with the holidays where small surprises can have outsized influences on prices."
Keeping declines in check, U.S. Treasury yields fell after a Labor Department report showed weekly jobless claims had risen more than expected, cementing bets that the Fed will not need to raise rates further.
While money markets have fully priced in a probability that the Fed will hold rates steady in December, they see about a 62% chance of a rate cut in May of at least 25 basis points, according to CME Group's FedWatch tool.
Among individual stocks, Macy's shares rallied after the department store operator's quarterly sales beat analysts' estimates.
(Reporting by Sinéad Carew, Caroline Valetkevitch in New York, Shristi Achar A and Amruta Khandekar in Bengaluru; Editing by Maju Samuel, Pooja Desai and David Gregorio)
