Today: Stocks fall after days of stability, with Yelp losing some of its gains and Hewlett-Packard (HPQ) again hitting an eight-year low. Also: Apple (AAPL) and Google (GOOG) reportedly talking peace in patent wars, eMarketer lops $1 billion off Facebook revenue projection.
Wall Street falls ahead of Bernanke speech; tech stocks weak
After three days of barely budging, Wall Street plunged Thursday, as tech stocks showed weakness while investors waited for a highly anticipated speech by Federal Reserve chief Ben Bernanke. The tech-heavy Nasdaq fell more than 1 percent to lead the three major U.S. stock indexes, while the Dow Jones industrial average fell to its lowest level in nearly a month.
Trading was light as summer nears its traditional end with Labor Day weekend,
"There's so little going on, it's all wait and see before Bernanke's speech," Scott Freeze, president of Street One Financial, told the Associated Press. "I'm sure next week will be a much different scenario."
Bernanke is expected to speak Friday morning to bankers in Jackson Hole, Wyo., and some onlookers are concerned that the Fed chief could cause a sell-off in stocks if he doesn't signal more willingness to juice the economy with action.
"If (Bernanke) doesn't tip his hand, then the market is going down on the speech," Uri Landesman, president of hedge fund Platinum Partners, told Reuters. "I don't think the market hangs in around 1,400 if he doesn't say anything substantive."
Few expect Bernanke to go the route that would satisfy Wall Street, however, with most predicting the Fed chief to continue his route of saying that the Fed will only act if the U.S. economy gets worse.
"I think it will be more 'all of our options are on the table' talk -- I doubt he's going to tip his hand," Bill Stone, chief investment strategist at PNC's asset management group, told the Wall Street Journal.
While the U.S. economy is growing at a slow pace, it has not completely stagnated, which causes concern among the Fed but not enough to act. For instance, Thursday's weekly unemployment-benefit numbers did not change from the week before at 374,000 claims, reflecting a slow but not worsening job market. Jennifer Lee, senior economist with BMO Capital Markets, wrote that the numbers showed "the August payroll report is not going to look terribly inspirational."
In Silicon Valley, tech stocks fell even harder than the rest of the market, with the SV150 index of the area's largest tech companies declining 1.4 percent. Yelp gave back some of its gigantic gains from Wednesday, losing 3 percent off a bounce that many analysts credited to an unexpected "short-squeeze" following the end of the San Francisco company's post-IPO lockup for early investors. Hewlett-Packard hit an eight-year low for the third time this week, falling as low as $16.77 and closing at $16.78 despite unveiling the company's first touch-screen laptops with Microsoft's Windows 8 operating system.
Solar companies were extremely weak in Thursday trading, as Chinese companies cut their yearly expectations, leading investors to dump U.S. companies. San Jose's SunPower (SPWRA) dropped 8.1 percent, and U.S. leader First Solar fell 18.7 percent.
Networking stocks headed down as Ciena, an East Coast networking equipment maker, released weak earnings and softened its outlook. Juniper was the hardest hit Silicon Valley networking company, falling 4 percent, while Cisco (CSCO) dropped 1.6 percent; Ciena declined 19.5 percent.
On the positive side, Oakland-based Pandora surged 14.3 percent after announcing strong earnings and an increased forecast in a Wednesday earnings report, and Electronic Arts (ERTS) gained 1.2 percent after obtaining a $500 million line of credit.
Apple and Google CEOs discussing patent detente, according to reports
In a surprising development, reports surfaced Thursday that Apple and Google were discussing their patent issues, despite late Apple co-founder Steve Jobs saying the company would go "thermonuclear" on the search giant because he believed the Android mobile operating system was copying Apple's iOS.
Reuters and Bloomberg News reported Thursday that the two companies' CEOs, Tim Cook and Larry Page, have discussed the intellectual property issues and will continue their talks. Other executives at the two companies are also engaged in discussions on the issue, according to the reports.
The issue was pushed to the front of the tech industry last week, when Apple defeated Samsung in a San Jose court battle -- Samsung's phones and tablets, which run on Android, were found to infringe on patents Apple owns for the iPhone and iPad. Bloomberg reported that Apple considered suing Google directly before aiming for hardware manufacturers with a series of lawsuits around the globe.
Apple stock fell for the third consecutive day since hitting records in the wake of the Samsung decision, with Thursday's decline being the largest of the three at 1.4 percent. Google stock, which declined Monday after the decision but gained the next two days, also fell Thursday, by 0.9 percent.
Facebook to earn $1 billion less than earlier expected this year, report says
Facebook opened higher Thursday but fell to a one-cent loss after eMarketer reported that the company's revenues will not grow by as much as previously calculated.
The market research firm reported Thursday that previous sales projections were off by more than $1 billion, reducing this year's projected revenues from $6.1 billion to $5.04 billion. The Menlo Park social network's core advertising business will not grow by as much as expected, according to the report.
"There is still hesitation about the effectiveness of the advertising, about how much the advertising is worth," Debra Aho Williamson, an EMarketer analyst, told Bloomberg News.
Silicon Valley tech stocks
Up: Pandora, Electronic Arts
The tech-heavy Nasdaq composite index: Down 32.48, or 1.05 percent, to 3,048.71
The blue chip Dow Jones industrial average: Down 106.77, or 0.81 percent, to 13,000.71
And the widely watched Standard & Poor's 500 index: Down 11.01, or 0.78 percent, to 1,399.48
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.