Stocks Follow Intel Lower
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Merger mania in the tech sector, tame inflation data and a rally in financial stocks were almost enough to rescue the stock market on Wednesday, but weaker than expected results from Intel proved too much to overcome.
Intel shares plunged 12% after the chip giant missed estimates and lowered revenue guidance. The surprise was that the rest of the sector gained: chip equipment stocks like Novellus and KLA-Tencor rose sharply after Intel raised capital spending guidance, and AMD jumped 7% on a Divx licensing agreement a day ahead of its quarterly results.
Nvidia was left out of the chip rally, falling 11% on a downgrade, and Sandisk lost 3.6% on Intel's comments about the flash market and competition from Samsung.
Still, despite an encouraging earnings report from JP Morgan and a tame consumer inflation report that left the Federal Reserve room to cut interest rates again in two weeks, stocks finished modestly lower in volatile trading.
Apple continued to come under pressure after its Macworld announcements came in largely as expected, losing another 5%.
The Nasdaq fell 23 to 2394, the S&P lost 7 to 1373, and the Dow lost 35 to 12,466. Volume rose to 5.44 billion shares on the NYSE, and 3.5 billion on the Nasdaq. Decliners led by a few shares on the NYSE, and by a 16-14 margin on the Nasdaq. Downside volume was 53% on the NYSE, and 56% on the Nasdaq. New highs-new lows were 36-387 on the NYSE, and 54-350 on the Nasdaq.