If a bickering Congress cant agree to extend the payroll tax cut and unemployment insurance, US economic growth could slow by almost a full percentage point next year and send stocks down sharply, analysts say.

Dec 21, 2011 

PARIS (AP) — Stock markets in Europe and the U.S. fell Wednesday after the European Central Bank loaned a record amount to the continent’s banks in an effort to bolster Europe’s stressed financial system.

The ECB loaned a massive euro489 billion ($639 billion) to 523 banks for an exceptionally long period of three years in an effort to steady a financial system under pressure from the eurozone debt crisis. It was the biggest ECB infusion of credit into the banking system in the euro’s 13 year history, surpassing the euro442 billion in one-year loans from June, 2009, when the financial system was struggling after the collapse of U.S. investment bank Lehman Brothers.

“It seems the sheer amount of money demanded by banks has shocked investors,” said Simon Furlong, a trader at Spreadex.

Following early gains, stocks in Europe fell. The FTSE 100 index of leading British shares closed down 0.6 percent at 5,389.74 while Germany’s DAX fell 1 percent to 5,791.53. The CAC-40 in France ended 0.8 percent lower at 3,030.47. The euro similarly gave up early gains, and was trading 0.6 percent lower at $1.3038.

In the U.S., the Dow Jones industrial average was down 0.5 percent at 12,041 while the broader S&P 500 index fell 0.6 percent to 1,234. The S&P was led lower by Oracle Corp., which fell almost 11 percent after the business software maker said it struggled to close deals. The results seemed to reinforce worries that businesses and the government may cut back technology spending.

Most attention centered on the ECB’s action, which is intended to make sure that banks have enough ready cash to operate and keep on loaning to businesses so that a credit crunch does not choke off economic growth. Many economists think the eurozone may be headed for at least a mild recession in coming months.

The credit infusion only treats one of the symptoms of the debt crisis. It does not remove the reasons banks remain wary of lending to each other — especially, their thin levels of capital reserves against potential losses. And it doesn’t cut the large levels of debt carried by governments.

European officials have said banks need to raise euro115 billion ($150 billion) in new capital — but finding that money is not an easy task in the current environment of fear. Investors are leery of putting more money into banks. It would be politically unpopular for governments to do it, and their finances are stressed as well.

“While today’s ECB action does ease some of the bank funding difficulties, it cannot address the sovereign debt crisis which is the root of those funding issues,” said Vassili Serebriakov, an analyst at Wells Fargo Bank.

Asian markets rose earlier despite ongoing concerns over a possible power struggle in North Korea following the death of Kim Jong Il. Seoul’s main index led the advance, ending 3.1 percent higher on the day at 1,848.41.

Tokyo’s main index gained 1.5 percent to 8,459.98 points while Hong Kong’s Hang Seng added 1.6 percent to 18,368.6. However, China’s benchmark Shanghai Composite Index ended down 1.1 percent at 2,181.15.

Meanwhile, oil rose moved closer to $98 a barrel Wednesday after a report showed U.S. crude supplies fell more than expected, a sign demand may be improving. By early afternoon in Europe, benchmark crude for February delivery was up $1 to $98.24 a barrel in electronic trading on the New York Mercantile Exchange.

AP Business Writer Joe McDonald in Beijing contributed to this article.

Copyright © 2012 The Associated Press. All rights reserved.

Baidu Drags N.Y. Index Lower as Sina Falls: China Overnight
December 22, 2011, 4:47 AM EST

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More From Businessweek

• Spreadtrum Leads Decline as Focus Falls in U.S.: China Overnight
• Windfall Tax Break Makes Cnooc Biggest Gainer: China Overnight
• Airlines Drag N.Y. Index Down as Qihoo Falls: China Overnight
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• BRIC Decade Ends With Record Stock Fund Outflows as Growth Slows

By Belinda Cao

Dec. 22 (Bloomberg) — Chinese stocks listed in the U.S. fell, pulling the benchmark index down from a one-week high, on concern growth in the world’s second-largest economy may slow as a lingering European debt crisis reduces exports.

The Bloomberg China-US 55 Index of the most-traded Chinese equities fell 1.5 percent to 93.69 at the close of trading in New York. Sina Corp., which owns the Twitter-like Weibo service in China, and Baidu Inc., the nation’s biggest online search engine, paced declines in Internet shares. NetEase.com Inc. retreated 6.6 percent after it was dropped from a focus list at Roth Capital Partners LLC. A 1.1 percent slump in China Mobile Ltd. created a 12-cent discount to its Hong Kong-listed shares.

Chinese Premier Wen Jiabao said this week that slowing growth and elevated prices are adding to the difficulties the government faces, and he encouraged export-reliant regions to explore sales to domestic or emerging markets. The country’s November exports rose the least since 2009, making the government more likely to pursue policies to sustain economic expansion as Europe’s debt crisis lingers.

China’s economy “depends on how much money is going to be thrown into the system,” said Khiem Do, the Hong Kong-based head of multi-asset strategy at Baring Asset Management Asia Ltd., in an interview with Bloomberg Television. “We hope that they would ease off a little bit by cutting banks’ reserve ratio, and they might cut the interest rates as well because many other central banks have cut the rates.”

Fiscal Policy

The government will maintain prudent monetary and proactive fiscal policy next year and policies will be fine-tuned as needed in accordance with the changing situation, the ruling Communist Party said after a meeting last week. The Chinese central bank reduced lenders’ reserve requirements on Nov. 30, the first time since 2008.

The Standard & Poor’s 500 Index advanced 0.2 percent to 1,243.72. The Shanghai Composite Index slid for a third day, losing 1.1 percent to 2,191.15 yesterday as equities were dragged down by a cash crunch that pushed the seven-day interbank funding rate up the most in a month.

Sina sank 6.6 percent to $52.07, the lowest since October 2010. It has lost 24 percent this year. The company, which also owns China’s third-most visited website, said last week Beijing’s municipal government will force microblog users to verify their identities. Chinese officials have pressured microblog services to strengthen supervision of users after a fatal rail crash in July sparked an outburst of criticism of the government.

‘Notorious Markets’

Baidu fell 4.6 percent, the most in a month, to $112.97, trimming its gain in 2011 to 17 percent. Baidu, China’s biggest Internet company by market value, was removed from the U.S. government’s list of “notorious markets” that help sustain piracy and counterfeiting of intellectual property, citing “positive action” by the company.

The ishares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., slid 0.8 percent to $34.76. The Chinese yuan strengthened 0.1 percent to 6.3387 per dollar, according to the China Foreign Exchange Trade System.

In Europe, lenders sought more funds from the European Central Bank than economists had predicted, reducing optimism that the debt crisis will be contained. A total of 523 euro-area banks took a record 489 billion euros ($639 billion) from the ECB in three-year loans yesterday, exceeding the median estimate of 293 billion euros among economists surveyed by Bloomberg.

China’s economy grew 9.1 percent in the third quarter from a year earlier, down from 9.5 percent in the second. Consumer prices rose 4.2 percent in November from a year ago, the slowest pace in 14 months.

Racism Accusation

The Nasdaq Stock Market was blocked from delisting a Chinese maker of wind towers after the company sued in New York state court, claiming the procedures for kicking it out are marred by racism.

CleanTech Innovations Inc., based in Tieling, China, alleged the exchange violated its own rules and the company’s right to due process in “arbitrarily and capriciously” seeking to remove it. New York State Supreme Court Justice Melvin Schweitzer put the delisting on hold and set a hearing next month for Nasdaq to show why the court shouldn’t let the suit proceed with expedited pre-trial evidence gathering.

China Telecom, the smallest of the country’s three mobile- phone carriers, added 2.16 million 3G users in November, 22 percent fewer than in the previous month, it said on its website Dec. 20. That compared with 2.68 million new users at China Mobile Ltd. and 3.38 million for China Unicom (Hong Kong) Ltd.

Mobile Shares

The American depositary receipts of China Telecom retreated 3.7 percent to a seven-month low of $55.96. Each ADR represents 100 common shares. The ADRs of China Mobile slipped 1.1 percent to $46.85, while China Unicom slid 0.3 percent to $20.83.

The ADRs of Cnooc Ltd., the nation’s largest offshore oil explorer, dropped 2.6 percent to $173.41. CLSA Ltd. said the company may idle two natural gas fields for as long as two months after they were shut this week because of a leak in a subsea pipeline. The outage could lead to gas shortages in the industrial province of Guangdong if supply from liquefied natural gas terminals is unable to make up the shortfall, CLSA analyst Simon Powell said in a research note e-mailed to clients Dec. 20.

Cnooc underperformed its peers PetroChina Co. and China Petroleum and Chemical Corp., known as Sinopec, in U.S. trading. PetroChina, the biggest oil producer in the country, may buy the 40 percent of Canada’s MacKay River oil sands project that it doesn’t already own from Athabasca Oil Sands Corp., the Calgary Herald reported yesterday. PetroChina would pay about $664 million to take over MacKay, which may produce 150,000 barrels of oil equivalent a day, the newspaper said.

PetroChina, Sinopec

PetroChina added 0.8 percent to $120.71 while Sinopec climbed 1 percent to $104.87. Crude oil for February delivery increased 1.5 percent to $98.67 a barrel on the New York Mercantile Exchange.

Youku.com Inc. and Tudou Holdings Ltd., China’s two largest operators of online video sites, are accusing each other of intellectual property infringements by running pirated videos.

“Negotiations went futile, while our competitor initiated misleading PR campaign, we have no other choice but to resort to legal action,” Jean Shao, Youku’s spokeswoman said in an email yesterday, saying its rival has started pirating its contents since 2010.

Youku is illegally showing the entertainment program series “Kangxi is Coming,” whose online broadcast rights in China are owned by Tudou, Yu Bin, vice president of finance at Tudou, said in a phone interview Dec. 19.

Tudou’s ADRs fell for an eighth day, slipping 3.8 percent to $10. Youku slumped 3.1 percent to $17.14.

–With assistance from Allen Wan in shanghai and Zachary Tracer in New York. Editors: Glenn Kalinoski, Richard Richtmyer

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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READER DISCUSSION

Stocks are headed for a mixed finish in trading today. Earlier today, all three major indexes had fallen sharply after weaker than expected earnings from Oracle Corporation (NASDAQ: ORCL) weighed down sentiments. However, stocks have pared some of their losses, with the Samp;P 500 turning green in late trading.

Technology stocks fell on Wednesday, dragged down by a rare weak earnings report from the business software maker Oracle.

Broad market indexes were flat. The Dow Jones industrial average eked out a gain of 4 points after having been down as much as 104 points at midday, led by technology stocks. The earnings miss by Oracle raised worries that weak government and business spending might hurt other big technology companies. I.B.M. was by far the biggest loser in the Dow, falling 3.1 percent to $181.47.

Investors also had more to worry about from Europe. Initial reaction to $639 billion in lending by the European Central Bank was positive, but then worry set in that Europe’s banks needed so much help in the first place.

“People were a little bit concerned that banks needed more money than we thought they did,” said Joe Bell, a senior equity analyst for Schaeffer’s Investment Research.

The Dow edged up 4.16 points, less than 0.1 percent, to close at 12,107.74. The Standard & Poor’s 500-stock index rose 2.42 points, or 0.2 percent, to 1,243.72. Outside of the 2 percent decline for technology companies, prices rose or were flat in the rest of the S.& P. 500’s 10 sectors.

The Nasdaq composite fell 25.76 points, or 1 percent, to 2,577.97.

Oracle plunged almost 14 percent after the company said it was struggling to close deals. The results seemed to reinforce worries that businesses and the government might cut back on technology spending. Especially worrying was a weak 2 percent gain in new software licenses, an important signal of demand from businesses. Oracle had predicted gains of as much as 16 percent.

Consumer staples rose with help from a 1.7 percent increase by Coca-Cola and a gain of 1.2 percent at Kraft Foods.

Nike rose 2.9 percent on strong demand and higher prices for its shoes and clothing.

The benchmark 10-year Treasury note fell 12/32, to 100 9/32, and the yield rose to 1.97 percent, from 1.93 percent late Tuesday.

Stocks clawed back much of the days earlier losses, closing mixed to lower as a sharp drop in technology shares outweighed and otherwise positive day for the market.

Technology represented the only negative sector on the Standard amp; Poors 500, but that was enough to drag the index to a modestly higher close. Utilities, consumer staples and energy performed best for the index. Big tech names also hurt the Dow industrials, and the Nasdaq lost about 1 percent for the day.

NEW YORK, Dec. 21 (UPI) — US stocks closed mixed Wednesday as investors pulled back after Tuesdays strong advances, with Nasdaq taking the brunt of it.

Stocks turned lower despite an increase in existing home sales. The National Association of Realtors said sales rose 4 percent from October to November.

By close of trading on Wall Street, the blue-chip Dow Jones industrial average added 4.16 points, 0.03 percent, to 12,107.74. The Standard Poors 500 index gained 2.42 points, 0.19 percent, to 1,243.72. The tech-dominated Nasdaq composite index gave up 25.76 points, 0.99 percent, to 2,577.97.

On the New York Stock Exchange, 1,871 stocks advanced and 1,171 declined on a volume of 3.4 billion shares traded.

The benchmark 10-year treasury note fell 13/32 to yield 1.972 percent.

The euro fell to $1.3046 from Tuesdays $1.3082. Against the yen, the dollar rose to 78.09 yen from Tuesdays 77.89 yen.

In Tokyo, the Nikkei 225 index gained 1.48 percent, 123.50, to 8,459.98.

In London, the FTSE 100 index gave up .055 percent, 29.86, to 5,389.74.

Dec. 21 (Bloomberg) — Canadian stocks rose for a second day, led by energy producers, after the US reported the biggest weekly drop in oil inventories since 2001.

Canadian Natural Resources Ltd., the countrys second- largest energy company by market value, gained 1.4 percent. Goldcorp Inc., the worlds second-biggest gold producer by market value, lost 1.7 percent as the metal retreated. BlackBerry maker Research In Motion Ltd. surged 9.8 percent after Reuters reported the company has declined takeover overtures” from companies including Amazon.com Inc.

The oil-inventory report it an indication that consumption is stronger than what everyone expected,” Tony Demarin, chief investment officer of BCV Asset Management in Winnipeg, Manitoba, said in a telephone interview. The firm oversees about C$300 million ($293 million). Why else would oil inventories go down? The economy is doing better than people are giving credit for,”

The Standard amp; Poors/TSX Composite Index advanced 36.65 points, or 0.3 percent, to 11,753.53.

The index has slipped 13 percent in 2011 after surging 50 percent in the previous two years as economists have cut global growth forecasts due in part to the European debt crisis. Energy and raw-materials companies, which make up 48 percent of Canadian stocks by market value according to data compiled by Bloomberg, have led the declines.

Inventory Plunge

The Samp;P/TSX Energy Index climbed as crude oil rose for a third day after the US reported almost five times the drop in inventories that analysts had forecast, according to the median estimate in a Bloomberg survey.

Canadian Natural increased 1.4 percent to C$36.75. Nexen Inc., an oil and gas producer with operations on five continents, rallied 4.6 percent to C$15.98. TransCanada Corp., the owner of the countrys biggest pipelines system, rose 1.4 percent to C$44.33.

Corridor Resources Inc., which explores for oil and gas in eastern Canada, sank 38 percent, the most in 11 years, to C$1.13 after saying it has been unable to find a joint-venture partner for its shale-gas prospect in New Brunswick.

The US Dollar Index climbed after the European Commission estimated that consumer confidence in the region fell to the lowest since August 2009 and Swiss Finance Minister Eveline Widmer-Schlumpf said the country is considering capital controls to weaken the franc.

Mining Shares

Raw-materials stocks in the Samp;P/TSX dropped. Goldcorp declined 1.7 percent to C$46.10. First Quantum Minerals Ltd., the countrys second-largest publicly traded copper producer, slipped 1.5 percent to C$18.81. San Gold Corp., which mines in Manitoba, slumped 7.7 percent to C$1.79 after soaring 41 percent yesterday on drilling results.

Banro Corp., which is developing gold projects in Africa, rallied 8.1 percent to C$3.60 after saying the Twangiza mine in the Democratic Republic of the Congo is on schedule for full production in the first quarter.

The Samp;P/TSX Telecommunications Services Index rose to the highest since January 2008 a day after a person familiar with the discussions said Globalive Communications Corp., the owner of Wind Mobile, is in talks to buy fellow carrier Mobilicity. Both companies are closely held.

A decline in competitors would benefit other industry companies, Phillip Huang, an analyst at UBS, said in a note to clients dated yesterday.

BCE, Telus

Rogers Communications Inc., the countrys biggest wireless carrier, gained 0.9 percent to C$38.60. BCE Inc., Canadas largest phone company, advanced 1.3 percent to C$41.26, the highest close since July 2007. Telus Corp., the countrys No. 3 wireless carrier, increased 1 percent to C$57, the highest since October 2007.

RIM jumped 9.8 percent to C$14.17 after closing at the lowest since December 2003 yesterday. Reuters cited unnamed people familiar with the situation in its report that Amazon is among companies that have approached the Waterloo, Ontario-based company about a potential takeover bid.

Microsoft Corp. and Nokia Oyj have considered making a joint bid for RIM, the Wall Street Journal said today, citing unnamed people familiar with the matter. Representatives of RIM, Amazon, Microsoft and Nokia declined to comment on the reports.

RIM shares tumbled 78 percent this year through yesterday as the company lost smartphone market share to Apple Inc. and phones using Google Inc.s Android operating system.

Open Text Corp., Canadas largest software company, slumped 5.4 percent to C$51.25 after Oracle Corp. reported second- quarter earnings below the average analyst estimate in a Bloomberg survey.

–With assistance from Hugo Miller in Toronto. Editors: Joanna Ossinger, Stephen Kleege

Dec. 21 (Bloomberg) — US stocks rose for a second day as higher oil prices lifted energy shares and Bank of America Corp. paced a rebound in lenders, helping the equity market recover from an early slump. Treasuries slid after lower-than-average demand at an auction.

The Standard amp; Poors 500 Index rose 0.2 percent to 1,243.72 at 4 pm in New York and the Dow Jones Industrial Average climbed 4.16 points to 12,107.74. Ten-year Treasury yields added five basis points to 1.97 percent. Oil surged on a bigger-than-forecast drop in US supplies. The euro lost 0.3 percent to $1.3044 and Italian and Spanish 10-year bond yields climbed at least 18 basis points as stronger-than-forecast demand for European Central Bank loans fueled concern the regions lenders were struggling to meet funding needs.

The Samp;P 500 recovered from an early 1 percent loss triggered by lower-than-forecast results at Oracle Corp., which tumbled the most in more than nine years. Bank of America climbed after agreeing to a $335 million settlement of a US probe into lending practices at its Countrywide Financial Corp. mortgage unit. Investors also turned their attention to jobless claims data tomorrow after last weeks report showed the fewest applications for unemployment benefits since May 2008.

It seems to be timed with the Bank of America, Countrywide settlement, said Timothy Ghriskey, who oversees $2 billion as chief investment officer of Solaris Group LLC in Bedford Hills, New York, referring to the stock markets rebound. It certainly takes away one bit of uncertainty in the news, he said. It seems to us that the settlement with Justice was not excessive at all.

Bank of America Gains

Bank of America advanced 1.2 percent, erasing an earlier 1.4 percent drop. Countrywide discriminated from 2004 to 2008, before Bank of America acquired the lender, by charging higher fees and interest rates to more than 200,000 black and Hispanic borrowers and steered minority borrowers into subprime mortgages, the DOJ said. Bank of America has committed about $40 billion for mortgage refunds, lawsuits and foreclosures since 2007, with most tied to alleged defects in the loans that affected investors.

The KBW Bank Index of 24 lenders advanced 1 percent, adding to yesterdays 4.1 percent rally.

Exxon Mobil Corp. and Chevron Corp. climbed more than 1.3 percent to pace an advance in 34 of 42 energy companies in the Samp;P 500. Oil rose 1.5 percent to $98.67 a barrel. Supplies fell 10.6 million barrels to 323.6 million last week, the US Energy Department said. Inventories were forecast to decline 2.13 million barrels, according to the median of 12 analyst estimates in a Bloomberg News survey. Supplies typically fall in December as refiners seek to avoid end-of-year tax liabilities.

Technology Shares

Technology companies, which account for 19 percent of the Samp;P 500 and are the largest group, sank 2 percent to lead declines among 10 industries.

Oracle dropped 12 percent, the most since 2002, after the second-largest software makers results were hurt by slower demand for databases, applications and computer servers.

Research In Motion Ltd. advanced 10 percent after the Wall Street Journal said that Microsoft Corp. and Nokia Oyj considered a joint bid for the maker of the BlackBerry smart phone, while Reuters reported that Amazon.com Inc. also considered buying the company.

The Samp;P 500 is down about 1.1 percent in 2011, having rallied as much as 8.4 percent and lost as much as 13 percent on a year-to-date basis during the year. Financial shares have lost 20 percent this year to lead declines.

The Samp;P GSCI Index of raw materials advanced 1 percent, as energy products and cocoa led gains in 15 of 24 commodities. The Dollar Index, which tracks the US currency against those of six trading partners, rose 0.1 percent after dropping as much as 0.8 percent earlier.

European Concerns

The Stoxx Europe 600 Index dropped 0.5 percent, erasing a gain of as much as 1.4 percent, as technology shares led losses, with SAP AG tumbling 6.1 percent and Cap Gemini SA losing 4.9 percent. Banks lost 0.7 percent as a group, with BNP Paribas down 3 percent and Banco Santander SA falling 1.4 percent.

The ECB awarded 489 billion euros ($645 billion) in loans to the regions banks in the latest attempt to tame the debt crisis, compared with a median forecast for 293 billion euros in a Bloomberg survey of economists.

Disorderly Deleveraging

What the ECB is doing is just trying to prevent a disorderly deleveraging of European bank assets, Barry Knapp, the New York-based head of US equity strategy at Barclays Plc, said in a telephone interview. By no means it solves the financing problem for Italy or Spain or for the banks.

The MSCI Emerging Markets Index climbed 1.6 percent. Taiwans Taiex Index rallied 4.6 percent, the most since May 2009, after the government said it would allow a state-run fund to buy stocks. South Koreas Kospi Index advanced 3.1 percent and the won strengthened 0.6 percent against the dollar, erasing losses earlier in the week sparked by the death of North Korean leader Kim Jong-Il.

Chinas Shanghai Composite Index retreated 1.1 percent, its third consecutive decline and extending its year-to-date decline to 22 percent, as a gauge of funding availability in the financial system rose, signaling banks were hoarding cash.

–With assistance from Daniel Tilles, Claudia Carpenter, Andrew Rummer, Jason Webb and Michael Shanahan in London and Alexander Kwiatkowski in Singapore. Editors: Michael P. Regan, Jeff Sutherland

To contact the reporters on this story: Rita Nazareth in Sao Paulo at rnazareth@bloomberg.net; Ksenia Galouchko in New York at kgalouchko1@bloomberg.net

To contact the editor responsible for this story: Michael P. Regan at mregan12@bloomberg.net

SAN FRANCISCO – Investors fled technology companies catering to businesses and government agencies after a discouraging quarterly report from Oracle Corp. pointed to a possible sales slowdown that could drag down the industry next year.

The stocks of Oracle and an assortment of other business software makers were discarded in Wednesdays trading. Wall Street administered the beating in reaction to Oracles lackluster performance during the three months ending in November.

The results, announced Tuesday after the stock market closed, fell well below the projections of industry analysts and Oracles own management. The shortfall stoked fears that big spenders on software and other technology are pulling back as the uncertainties raised by Europes debt crisis threatens to topple a fragile global economy.

Oracle absorbed the brunt of the punishment. Its shares plunged by 12 percent, their steepest decline in nearly a decade. The jarring downturn lopped about $18 billion off of Oracles market value and trimmed about $4 billion from the fortune of its CEO, Larry Ellison, who owns a 22 percent stake in the company. Oracle shares had plunged $3.51 to $25.67 during Wednesdays late afternoon trading. It marked the biggest single-day drop in Oracles stock price since March 2002 when the shares plummeted 14.5 percent, according to data compiled by FactSet.

The list of other business software makers caught up in the downdraft during late afternoon trading included: VMware Inc., whose share fell $9.69, or 11 percent, to $75.63; Citrix Systems Inc., down $5.66, or nearly 9 percent, to $57.72; SAP AG, down $3.92, or 7 percent, to $51.81; F5 Networks Inc., down $8.30, or more than 7 percent, to $101.09; Teradata Corp., down $3.01, or 6 percent, to $47.48; Cognizant Technology Solutions Corp., down $4.64, or 7 percent, to $62.99; Salesforce.com Inc., down $6.22, or 6 percent, to $98.10; and Red Hat Inc., down $2.01, or nearly 5 percent, to $39.94.

More diversified technology companies that, like Oracle, sell hardware as well as software also got clipped. For instance, IBM Corp. shares shed $6.79, or nearly 4 percent, to $180.45 in late afternoon trading.

The sell-off had analysts debating whether Oracles letdown had more to do with internal problems within the company or a clampdown on technology budgets by major technology customers heading into the new year.

Although Oracles sales team may have executed poorly during the quarter, Nomura Securities analyst Rick Sherlund was troubled by apparent delays during the quarter. Oracle executives said the decision makers who typically can sign technology contracts held off because they needed to get approvals from higher up in the chain of command — in some cases from the CEO. In a Wednesday research note, Sherlund said that kind of caution typically signals companies are getting worried about the economy.

We have reduced estimates rather sharply to reflect a greater macro slowdown than we had previously thought likely, recognizing that extrapolating from one single quarter as a data point may prove to be an overreaction, Sherlund wrote.

In a Tuesday conference call, Oracle executives predicted many of the deals that got delayed in the last quarter will get done in the next few months. The company, based in Redwood Shores, Calif., declined further comment Wednesday.

JMP Securities Patrick Walravens was more sanguine in his Wednesday research note. In anticipation of a quick rebound, he maintained his $36 price target for Oracles stock. The shares havent traded that high since May.

Although he branded Oracles quarterly results as worrisome, Forrester Research analyst Andrew Bartels believes the company was hurt most by the misfortune of having its quarter close in November. The month was marked by high anxiety in the eurozone about possible government defaults and disheartening government reports about the state of the US economy.

So, business executives were understandably cautious about the business outlook, Bartels wrote in a Wednesday blog post.

But more encouraging signs about the US economys recovery and debt relief in Europe may have spurred more technology spending in the final weeks of the year, Bartels. He thinks that means companies whose quarters end in December and January — a group that includes IBM, SAP, VMware, Citrix and Salesforce.com — may fare much better than Oracle.

Forrester Research expects US spending on information technology to increase by about 6.6 percent next year, in the same range as last years.

A stronger dollar also is squeezing Oracle and other technology companies with significant sales overseas. The currency shift is translating into less revenue from markets such as Europe, making for unfavorable comparisons to last year.