Intel Weighs On Stocks

A big sales warning from Intel weighed on stocks Friday.

Stocks opened sharply lower on Intel’s warning, then rebounded to post solid gains on soothing words on inflation from two Federal Reserve officials before sellers returned to send the major indexes modestly lower on the day.

Intel ended the day down less than 1%, but names like AMD , Apple , Applied Materials , KLA-Tencor and Novellus lost 2-4% each. Novellus reaffirmed guidance in its mid-quarter update.

Intel cited “weaker than expected demand and a slight market segment share loss” for the warning.

Investors will get another look at the health of the chip sector late Monday, when Texas Instruments holds its mid-quarter update.

Also influencing next week’s trading could be Research in Motion , which settled its long-running patent dispute with NTP late Friday, avoiding a shutdown of its U.S. service. Competitor Palm fell in after-hours trading Friday, while RIM shares were halted. RIM also pre-announced disappointing quarterly results.

The Nasdaq lost 8 to 2302, the S&P 500 gave back 2 to 1287, and the Dow slipped 4 to 11,021. Volume declined to 2.15 billion shares on the NYSE, but rose to 2.44 billion on the Nasdaq. Decliners led 19-13 on the NYSE, and 17-12 on the Nasdaq. Downside volume was 55% on the NYSE, and 54% on the Nasdaq. New highs-new lows were 169-27 on the NYSE, and 175-33 on the Nasdaq.

Finisar soared 40% on its results.

Novell fell 17% on its earnings report.

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