Wall St dives on tech, bank outlooks; Bear hit late

By Ellis Mnyandu

NEW YORK (Reuters) - U.S. stocks fell for a second day on Thursday as soft results from technology bellwether Oracle Corp (ORCL.O) fed worry about a cutback in business spending, while bank shares fell on fears of another major casualty in the sector.

Oracle's weaker-than-expected revenue and cautious comments from its chief financial officer knocked the software maker's shares down 7.2 percent. That triggered a widespread sell-off of technology shares, including Apple Inc (AAPL.O), which slid 3.3 percent.

Rumors that Lehman Brothers Holdings Inc LEH.N could suffer a fate similar to the near collapse of Bear Stearns BSC.N pushed Lehman's shares down 8.9 percent. Lehman called the rumors "totally unfounded."

A 3.1 percent slide in Google Inc's (GOOG.O) shares after Lehman slashed its price target on the Web search leader added to anxieties about tech stocks.

"Oracle came out with results that were a little light and their forward guidance was a little cautious," said James Rosenthal, head trader at Punk Ziegel & Co. in New York.

"Oracle is a very large company. It sells into a lot of different spaces, and if they are a little cautious and companies are waiting to make spending decisions, that will affect all businesses going forward for the next three to six months, and that's why techs are weak today."

The Dow Jones industrial average .DJI slid 120.40 points, or 0.97 percent, to end at 12,302.46. The Standard & Poor's 500 Index .SPX fell 15.37 points, or 1.15 percent, to finish at 1,325.76. The Nasdaq Composite Index .IXIC slumped 43.53 points, or 1.87 percent, to close at 2,280.83.

After the closing bell, shares of Bear Stearns, the troubled Wall Street bank in the process of being acquired by JPMorgan Chase & Co, fell 5.2 percent to $10.65 after news that Chairman James Cayne and his wife had sold $61.3 million worth of the bank's stock.

Bear Stearns' stock had ended regular trading at $11.23, up 18 cents, or 0.02 percent, on the NYSE. Earlier this week, JPMorgan increased its offer for Bear fivefold to $10 a share.

BOEING AND ORACLE DIVE

During the regular session, shares of Boeing Co (BA.N) were the top drag on the Dow. Boeing fell 2.7 percent to close at $74.22 on the NYSE after Citigroup cut its price target on the stock to $68 from $78.

Trading was volatile and indexes gyrated widely until the last hour of trading when financial stocks tacked on more losses, causing the market to end right at its session lows.

Oracle shares dropped to $19.43 on the Nasdaq, while shares of Apple, the computer and iPod maker, tumbled to $140.25.

Shares of BlackBerry devices maker Research In Motion Ltd (RIMM.O) slumped 5.1 percent to $112.15 on Nasdaq.

Google shares ended down 3.1 percent at $444.08 after Lehman Brothers cuts its price target by 10 percent on the stock to $580. Chip maker Intel Corp (INTC.O) was another high-profile tech casualty, along with technology services company International Business Machines Corp (IBM.N).