Wall Street down on results but bounces off lows

Wall Street was weighed down by disappointing earnings from Cisco Systems, but stocks bounced off their lows on Thursday as investors saw weakness in the market as a buying opportunity.

Stocks opened lower as Cisco Systems Inc shares fell 12.7 percent to $19.25 a day after the network equipment maker warned about dwindling public spending and reported weaker quarterly margins.

The pattern that we have been seeing recently is that we don't see selloffs that last very long. They are being bought. Investors are buying on the dips, said Howard Ward, chief investment officer of Gamco Growth Fund in New York.

Further supporting the market, new U.S. claims for unemployment benefits dropped to their lowest in 2-1/2 years, the government said, in a sign the labor market was improving.

The Dow Jones industrial average <.DJI> was down 37.92 points, or 0.31 percent, at 12,201.97. The Standard & Poor's 500 Index <.SPX> fell 3.59 points, or 0.27 percent, at 1,317.29. The Nasdaq Composite Index <.IXIC> dipped 8.75 points, or 0.31 percent, at 2,780.32.

Weighing on equities were higher yields for indebted European countries, which reflected concern over the lack of a concrete policy to tackle the euro zone's debt crisis. The U.S. dollar gained versus the euro and pulled commodity prices lower.

Disappointing earnings overseas also hurt sentiment as Credit Suisse missed profit expectations. The bank's U.S.-traded shares dropped 7.3 percent to $43.23.

Soft drink and snacks maker PepsiCo Inc

cut its full-year earnings growth target, sending its shares down 1.8 percent to $63.29.

In the latest from Egypt, Prime Minister Ahmed Shafiq told Britain's BBC that President Hosni Mubarak may step down and the situation in the country will be clarified soon, the British broadcaster said on Thursday.

The chart for the S&P 500 index shows near-term technical support at the 1,313 level, getting stronger near 1,300.

(Reporting by Angela Moon, Editing by Kenneth Barry)