Dow ends losing streak with gain, Cisco a drag

NEW YORK (Reuters) - The Dow and the S&P 500 eked out a modest gain on Thursday as investors dipped back into the market after a weak stretch, but a disappointing outlook from tech bellwether Cisco Systems and caution about Europe limited gains.

In a positive development, euro-zone officials said the bloc's countries are prepared to keep financing Greece until the country forms a new government, either after Sunday's election or if new elections are needed next month.

Cisco Systems Inc lost 10.5 percent to $16.81, its biggest percentage drop since February 2011, making it the biggest drag on the market. The network equipment maker forecast profits below Wall Street's estimates.

The Dow's modest rise broke a six-day losing streak for the blue-chip index. But the S&P 500 could not hold enough gains to close above its April low. Still, the S&P 500 has rebounded after falling to a two-month low near 1,340 on Wednesday.

"You are seeing traders and investors come into some of these very oversold sectors and buying on the dips. Then suddenly, the people who are scared decide to start selling into it," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"That is what you are seeing today. You are seeing the see-saw between people who are coming in, and adding positions slowly, and people who are saying, 'The world is coming to an end. I want out.'"

The Dow Jones industrial average <.DJI> rose 19.98 points, or 0.16 percent, to 12,855.04 at the close. The Standard & Poor's 500 Index <.SPX> added 3.41 points, or 0.25 percent, to 1,357.99. But the Nasdaq Composite Index <.IXIC> fell 1.07 points, or 0.04 percent, to close at 2,933.64.

The latest uncertainty surrounding Greece and the euro zone's sovereign debt crisis helped spark a drop in the S&P 500 in five of the past seven sessions, sending the benchmark index down 4 percent. While the region's difficulties persisted with the political gridlock in Greece, investors used the market's declines as a buying opportunity.

The number of Americans applying for jobless benefits fell last week, but from an upwardly revised figure from the previous week. The report follows last month's nonfarm payrolls report, which showed weak employment growth in April.

Signs of softness in the U.S. economy recently have led some investors to err on the side of caution and cut back on sectors exposed to the vicissitudes of the economic cycle.

The Standard & Poor's 500 could fall 5 percent to 7 percent from its April high, and see "several months" of choppy trading, said Citigroup's chief U.S. equity strategist Tobias Levkovich.

"I don't see that as unreasonable," he said. "The solutions to some of these things are not imminent. People forgot them and got a little bit too excited."

On the plus side, News Corp rose after its profit beat expectations late Wednesday and it announced a $5 billion stock buyback. Its stock climbed 4.9 percent to $20.32.

With 449 of the S&P 500 companies reporting results through Thursday morning, 66.4 percent exceeded estimates, according to Thomson Reuters data, compared with more than 80 percent at the start of earnings season.

Volume was 6.59 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE Amex, just below the 50-day moving average of 6.65 billion.

On the NYSE, more than three shares rose for every two that fell, while for the Nasdaq, about seven stocks advanced for every five that fell.

(Additional reporting by Chuck Mikolajczak and Caroline Valetkevitch; Editing by Kenneth Barry and Jan Paschal)

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