Technology shares fell after Merrill Lynch's downgrade of the global semiconductor industry hurt companies like Intel, but the overall stock market ended mixed as large-caps benefited from a late-day rally.

The Dow Jones industrial average (search) gained 25 points, or 0.24 percent, to 10,238.22, while the broaderStandard & Poor's 500 Index (search) rose 1.54 points, or 0.14 percent, to 1,114.35. The technology-lacedNasdaq Composite Index (search) dropped 9.41 points, or 0.48 percent, to 1,936.92.

Merrill Lynch cut its rating on the entire sector from "overweight" to "underweight," citing lower-than-expected demand for both personal computers and corporate hardware. The firm also downgraded Intel Corp. a day before it was due to release its earnings.

While some analysts still expect a strong second quarter, investors were concerned by the continuing stream of earnings warnings and analyst downgrades. However, most of the bearish news was confined to the technology sector, and earnings from banking companies brought large-cap stocks higher.

Yet the news was sufficiently muddled to cause concern on the part of veteran market watchers.

"The market isn't really responding to good earnings," said Todd Leone, managing director of equity trading at SG Cowen Securities. "Expectations have been lowered, so I suppose there's a chance we can see a little bit of a rally as earnings season moves forward, but I really don't know what to expect."

The earnings reporting season heats up this week with scorecards from blue chip companies like Intel, health-care products maker Johnson & Johnson (JNJ), bank Citigroup (C) and Apple Computer (AAPL).

The broader market staged an afternoon rebound, however, as a sharp pullback in oil prices eased concerns persistently high energy costs could bite into corporate profits. NYMEX crude futures fell back below $40 a barrel -- a level viewed by many traders as a benchmark.

"No doubt there's relief," said David Memmot, head of listed block trading at Morgan Stanley.

Aside from a slew of earnings and economic data in the next two weeks, investors will also zero in on Federal Reserve Chairman Alan Greenspan's (search) semiannual testimony before Congress July 20-21.

The downgrades in semiconductors weighed on the entire technology sector. Intel slipped 33 cents to $26.24, while Novellus Systems (NVLS), a microprocessor equipment provider, fell $1.33 to $29.72 despite beating Wall Street estimates by 3 cents per share.

Applied Materials Inc. (AMAT), the world's largest maker of microchip-making equipment, fell 48 cents, or 2.6 percent to $18.18.

The banking sector had a strong showing in its first earnings reports of the quarter. SunTrust Banks Inc. (STI ) also beat expectations by 3 cents per share on gains in its investment, mortgage and wealth management businesses. SunTrust gained $1.62 to $66.00. M&T Bank Corp. (MTB) surged $3.70 to $91.60 after it too beat Wall Street expectations by 8 cents per share.

Morgan Stanley (WMD) was up 34 cents at $50.34 after settling a high-profile sexual discrimination lawsuit for $54 million. The Equal Opportunity Employment Commission had accused the investment bank of denying promotions to women in favor of less qualified men.

NCR Corp. (NCR)' maker of ATM machines and barcode scanners, provided a rare positive outlook, saying its second quarter earnings could come in as high as 35 cents per share. Analysts had been expecting 18 cents per share. NCR was up $4.79 at $51.81.

Trading was light, with only about 1.1 billion shares traded on the New York Stock Exchange and about 1.5 billion shares traded on Nasdaq.

The Russell 2000 index of smaller companies was down 1.67, or 0.3 percent, at 562.06.

Overseas, Japan's Nikkei stock average rose 1.4 percent. In Europe, Britain's FTSE 100 closed down 0.8 percent, France's CAC-40 dropped 0.5 percent for the session, and Germany's DAX index fell 0.8 percent.

Reuters and the Associated Press contributed to this report.