NEW YORK – U.S stocks ended slightly lower Friday as Intel Corp's (INTC) warning about a quarterly revenue shortfall overshadowed Federal Reserve Vice Chairman Roger Ferguson's comments that the economy was "solidly on track."
Intel, the world's largest semiconductor maker, warned before the opening bell that first-quarter revenue would miss its previous expectation because of weaker-than-expected demand and a slight loss of market share. Intel's stock ended down 0.8 percent at $20.32 on Nasdaq, after hitting a 17-month low of $19.86 earlier in the day.
"Any time the largest chip maker in the world cuts their revenue outlook, it's definitely going to weigh on stocks," said Edward Bretscher, principal of equity sales and trading at First Albany Corp.
The Dow Jones industrial average dipped 3.92 points, or 0.04 percent, to end at 11,021.59. The Standard & Poor's 500 Index was down 1.91 points, or 0.15 percent, at 1,287.23. The Nasdaq Composite Index was down 8.51 points, or 0.37 percent, at 2,302.60.
For the week, the Dow industrials fell 0.36 percent and the S&P 500 slipped 0.17 percent, while the Nasdaq gained 0.68 percent.
Ferguson said the economy was "solidly on track" even though it faced a number of significant risks, including the possibility that house prices and construction could retrench sharply and energy prices could rise significantly further. He was speaking at a Howard University forum.
"The market has every excuse in the world to be down right now — higher oil prices, higher interest rates, and negative Intel news," Bretscher said.
The yield of the benchmark 10-year U.S. Treasury note spiked to a one-year high of 4.69 percent from Thursday's yield of 4.63 percent, adding to investors' anxiety that interest rates may have to rise much more in the months ahead to keep inflation at bay.
The 10-year note's price, which moves in the opposite direction of its yield, slipped 13/32 to 98-16/32.
The Philadelphia KBW index of bank stocks fell 0.4 percent, reflecting investors' concerns about rising rates.
Higher interest rates would hurt corporate profits and raise borrowing costs for consumers, whose spending accounts for about two-thirds of the U.S. economy. In the banking sector, higher rates make it harder for banks and other lenders to make money on loans.
U.S. crude for April delivery rose 31 cents to settle at $63.67 a barrel.
Friday's trading session proved more volatile in the wake of Intel's warning, with all three major U.S. stock indexes gyrating back and forth until the market close, traders said.
But even with the volatility, investors snapped up select stocks, including Boeing Co. (BA), whose shares rose 0.8 percent, or 59 cents, to end at $73.39 on the New York Stock Exchange. Australia said it planned to buy up to A$2 billion ($1.5 billion) worth of Boeing's large transport planes for its defense force. Boeing was the Dow's biggest positive influence and limited its decline.
Investors also bought shares of other Dow industrials like Honeywell International Inc., which finished up 0.6 percent, or 24 cents, at $41.72, and heavy equipment maker Caterpillar Inc. (CAT), up 0.4 percent, or 27 cents, at $74.61, both in NYSE trading. These stocks also were were among the Dow's biggest gainers.
"A lot of growth equities are in favor right now," said Tim Heekin, director of trading at San Francisco investment bank Thomas Weisel Partners.
"Ferguson's comments are a positive. They may have counter-balanced people's potential concerns" about the outlook for interest rates, he added.
Trading was moderate on the NYSE with about 1.57 billion shares being exchanged, below last year's daily average of 1.62 billion shares. On Nasdaq, 2.44 billion shares were traded, also above last year's 1.80 billion daily average.
About 10 shares fell for every 7 stocks that rose on the NYSE, while on Nasdaq, decliners outnumbered advancers by a ratio of 3 to 2.