Wall Street ends lower on tech

Traders work on the floor of the New York Stock Exchange September 22, 2010.

NEW YORK (Reuters) - Stocks slipped on Wednesday, ending the Dow's five-day winning streak, following Adobe's discouraging revenue outlook and investors' disappointment over Microsoft's new dividend.

Investors also weighed the impact of the Federal Reserve's statement on Tuesday, which indicated the central bank was edging closer to pumping hundreds of billions of new dollars into the sluggish economy.

Adobe Systems Inc (ADBE.O) slid 19 percent to $26.67, ranking as the biggest drag on the S&P 500 and Nasdaq a day after the software company forecast lower-than-expected revenue, citing weak demand. Analysts slashed their ratings on Adobe's stock.

Microsoft Corp (MSFT.O) was the Dow's top decliner, falling 2.2 percent to $24.61. The company raised its quarterly dividend and is set to pay out about $5.5 billion in annual dividends to shareholders, but the move fell short of some investors' expectations.

"They wanted either a higher payout or a more concrete use for the cash," said Andy Fitzpatrick, director of investments at Hinsdale Associates in Hinsdale, Illinois. "This is a matter of using the cash they have to their advantage and they don't have any measure in place to execute that."

The Fed's cautious statement in the previous session, which hinted that the U.S. central bank may embark on a new round of monetary stimulus, unsettled some investors who had become more optimistic about the economy as stocks rallied to a four-month high.

"The Fed's comments were a double-edged sword. On one hand, they're concerned about the economy, but on the other hand, they might do something stimulative. Stocks could go either way," said Thomas Villalta, portfolio manager for Jones Villalta Asset Management in Austin, Texas.

The Dow Jones industrial average .DJI dipped 21.72 points, or 0.20 percent, to 10,739.31. The Standard & Poor's 500 Index .SPX slipped 5.50 points, or 0.48 percent, to 1,134.28. The Nasdaq Composite Index .IXIC lost 14.80 points, or 0.63 percent, to 2,334.55.

The Dow's loss was limited by Alcoa Inc (AA.N), which surged 4.8 percent to $11.70 a day after a steep sell-off.

The S&P 500 has rallied almost 9 percent in the last three weeks, hitting a four month-high on Monday and breaching a strong technical resistance level as improved economic data suggested the economy might not slide back into recession as some had feared.

Red Hat Inc (RHT.N) rose 2.7 percent to $37.75 after the bell following the Linux software provider's adjusted second-quarter earnings, which beat expectations.

Bed Bath & Beyond Inc (BBBY.O) climbed 5 percent to $44.15 in extended-hours trading after the retailer reported a higher-than-expected profit.

U.S. gold futures hit a record near $1,300 per ounce and the price of the 30-year U.S. Treasury bond ended up almost a full point as its yield slid to a three-week low on hopes the Fed may increase its purchases of Treasuries as part of a second round of quantitative easing. The Arca Gold Bugs index .HUI rose 1 percent.

"The most notable market action today is in bonds and gold, and that shows the market taking into account the Fed's unexpected view that it might need to take action to stimulate the economy," said Nicholas Colas, chief market strategist at the New York-based ConvergEx Group.

In other downbeat corporate news, chipmaker PMC-Sierra Inc (PMCS.O) cut its third-quarter revenue outlook and forecast gross margins at the lower end of its expectations, driving its stock down 6 percent to $7.32.

Online retail site operator eBay Inc (EBAY.O) fell 1.6 percent to $24.34 after it eliminated the likelihood that its third-quarter profit would beat analysts' expectations.

On the upside, both General Mills Inc (GIS.N) and CarMax Inc (KMX.N) reported quarterly profits that beat expectations.

General Mills rose 2.7 percent to $36.63 while CarMax advanced 8.5 percent to $26.16.

Volume was very light, with 7.65 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, far below last year's estimated daily average of 9.65 billion shares.

Declining stocks outnumbered advancing ones on the NYSE by a ratio of about 3 to 2. On the Nasdaq, about two stocks fell for every one that rose.

(Editing by Jan Paschal)