STOCKS HEADED SOUTH last week, ending a five-week winning streak and posting their biggest weekly drop in three months. You can blame fears of a slowdown in China, which swept through the market Friday, but it was a lackluster profit outlook from tech titan Cisco Systems (ticker: CSCO) that really got things moving in the wrong direction, for both the major indexes and the company’s shares.

Technology and financial stocks took the brunt of the selling, which saw the Dow Jones Industrial Average close down 2.2%, to 11,192.58, for the five trading sessions. The Nasdaq Composite gave up 2.36%, to 2518.21.

Cisco, a maker of networking gear, stunned Wall Street after Wednesday’s close by forecasting lower revenue growth in its current quarter and for all of fiscal 2011, ending next July. The company cited budget cutbacks by governments in the U.S. and abroad, as its shares fell 17%, to 20.15 on the week. Another tech bellwether, Intel (INTC), announced a 15% dividend increase Friday, calling 2010 its “best year ever,” but the news did little to reverse negative market sentiment. Intel ended the session up 1.5%, at 21.53.
Louise Yamada, a technical analyst based in New York, said technology remains one of her favorite sectors, but the names that have advanced “are due for a well-deserved rest.”
CHINA’S SHANGHAI COMPOSITE INDEX had its worst week since early July, falling 4.6% on fears that the Chinese government could further tighten monetary policy. Consumer prices in China rose a higher-than-expected 4.4% in October.

Any slowdown in China’s growth, and that of other emerging markets, would curtail demand for raw materials. Perhaps in anticipation, oil fell more than 3% Friday, and the December contract knocked off $1.97 a barrel, to near $85, on the week, securing its fourth decline in five weeks.

Yet, there’s talk on the Street that the price could spike to $100 per barrel in the next 12 months. JPMorgan raised its oil-price estimate last week, and now expects crude to average $90 a barrel in 2011, about $5 above the consensus.

Natural-gas prices fell 3.5% for the week, closing at $3.79 per million British thermal units. Weak gas prices didn’t seem to help Chevron (CVX), however, which agreed to acquire Atlas Energy, one of the early explorers in Pennsylvania’s gas-rich Marcellus shale. The deal, for $3.2 billion in cash and $1 billion in debt, was announced after Pennsylvania Republicans scored electoral victories, which eased worries about regulatory restrictions on fracking, the messy process of forcing gas out of underground shale rock (Source: Barrons Online).