Chips Hit The Skids

Uninspiring guidance from Texas Instruments and a sector downgrade from Bank of America sent chip stocks sprawling on Wednesday.

Texas Instruments reaffirmed fourth-quarter guidance after the close on Tuesday, but cited “a market environment characterized by ongoing inventory adjustments.” After surprisingly strong guidance from Intel last week, investors may have been looking for more from TI, which fell 4% during Wednesday’s trading session.

Bank of America downgraded seven chip stocks to “sell,” citing slowing growth and high inventories. The seven were Xilinx , Altera , Actel , Intersil , National Semi , Analog Devices and Semtech .

The chip sector lost 2% on the day, despite strong gains in the broader market.

The sector’s woes continued after the bell, as Xilinx, Altera and Cymer all warned, sending the sector, as measured by the Semiconductor Holders Trust another 2% lower after hours.

The broader market rebounded during the day as the dollar rebounded, GE was upgraded, and Merck delivered guidance that wasn’t as bad as feared.

The Nasdaq rose 11 to 2126, the S&P 500 climbed 5 to 1182, and the Dow gained 53 to 10,494. Volume declined to 1.53 billion shares on the NYSE, and 2.41 billion on the Nasdaq. Advancers led 19-13 on the NYSE, and 17-13 on the Nasdaq. Upside volume was 55% on the NYSE, and 39% on the Nasdaq. New highs-new lows were 88-40 on the NYSE, and 71-21 on the Nasdaq.

IBM edged higher as the company sold its PC business to China’s Lenovo.

Seagate climbed 3% after raising guidance.

Vimpel plunged 22% on Russian tax problems.

Nortel gained 1% after the company announced plans to release limited results next week and to file its restated financial statements Jan. 10.

Sirius plunged 23% on 580 million shares on a Smith Barney downgrade.

Unisys fell 9% on a warning and downgrade.

Remec gained 5% on its results, while Photronics fell 8% on its results.