Dow Ends Its Win Streak

By BRENDAN CONWAY

Stocks made late-session gains on expectations Egyptian President Hosni Mubarak would step down from office, though those hopes were dashed as it appeared he would cling to power.

The events during the final hour of trading in New York injected more uncertainty into a market that had mostly shrugged off the Egyptian turmoil.

The Dow Jones Industrial Average logged its first drop in nine days, closing down 10.60 points, or 0.1%, at 12229.29. The Standard & Poor's 500-stock index rose 0.99 point, or 0.1%, at 1321.87, while the technology-oriented Nasdaq Composite gained 1.38 points, or 0.05%, to 2790.45.

A disappointing earnings report from Cisco Systems turned into the biggest drag on stocks through most of the day, and pulled down the Dow 24 points. But late afternoon speculation that Mr. Mubarak would cede power helped to lift stocks in the final half hour of trading.

Investors said the unrest in Egypt may be highlighting anew the risks in emerging markets, prompting some to transfer funds back into U.S. stocks. Though Dow futures edged slightly lower during after-hours trading, investors said the speech seemed unlikely to trigger a selloff Friday.

"If the violence does get to be substantive, there's always concern about the influence to the Suez Canal," said Mark Luschini, chief investment strategist at Janney Montgomery Scott.

The Dow was lower all day despite better-than-expected jobless claims, as the blue chips sagged under the weight of technology bellwether Cisco's disappointing earnings report and weakness in the consumer sector. The stock's decline amounted to a 24-point weight on the Dow.

Cisco slumped $3.12, or 14%, to $18.92, as its outlook and margins disappointed investors. A drop in profit and a fourth consecutive quarterly decline in margins were viewed as signs of increasing competitive pressures in Cisco's core network switching business. The results also reflected more sales of less profitable consumer products.

Still, strategists said investors weren't anticipating much fallout for the broader market from Cisco's disappointment.

Stocks being rocked and rolled by Cisco's weakness, a building sell-off and breaking news that Egypt's Mubarak may step down. George Stahl, John Shipman and Paul Vigna report.

"For the most part, earnings season has been positive, with the market taking two steps forward and one step back," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. He said small-capitalization stocks were positive for much of the session in a sign that the major indexes' downdraft was contained.

Meanwhile, in the period ended Jan. 31, the number of short-selling positions at the New York Stock Exchange not yet closed out, known as short interest, fell 1.39%, its lowest level since November 2007. The positions decreased to 12,439,408,665 shares from 12,615,034,604 shares in the period ended Jan. 14.

Also weighing on the Dow, UBS analysts cut their investment rating on shares in Wal-Mart Stores as they predicted negative comparable-store sales growth when the retailer reports earnings this month. Wal-Mart fell 1.14, or 2%, to 55.59.

Among companies reporting earnings, PepsiCo dropped 1.06, or 1.7%, to 63.36, after the company said it faces headwinds from high unemployment, cost inflation and a potentially tough competitive pricing environment.

Home and auto insurer Allstate said its fourth-quarter profit fell due to an increase in disaster claims, primarily from a hailstorm that struck Arizona in October. Shares dropped 1.16, or 3.6%, to 31.20, as operating earnings missed analyst estimates.

Activision Blizzard's fourth-quarter loss narrowed on lower charges, but the videogame publisher issued a disappointing 2011 outlook and said it will discontinue its "Guitar Hero" unit. Shares dropped 94 cents, or 8%, to 10.75.

Akamai Technologies' first-quarter forecast disappointed Wall Street, with revenue views falling short of analysts' estimates. The stock fell 7.24, or 15%, to 40.75.

Sprint Nextel said its fourth-quarter loss narrowed slightly as it added contract customers for the first time in more than three years. Shares climbed 25 cents, or 5.8%, to 4.60.

Whole Foods Market rallied 6.30, or 12%, to 60.05, after the grocer lifted its 2011 forecasts for profit and sales.

Write to Brendan Conway at brendan.conway@dowjones.com