NEW YORK – Technology stocks shed early losses and rose Friday as investors snapped up semiconductor and wireless stocks after an upbeat outlook from Dell Computer Corp., but traders remained wary amid a mixed bag of earnings reports and soft economic data.
The blue-chip Dow Jones industrial average dropped 40.08 points at 8,778.06 while the technology-packed Nasdaq Composite Index gained 16 points at 1,361.01. The broader Standard & Poor's 500 Index dropped 1.48 point at 928.77.
For the week, the Dow average inched up 0.4 percent, its first four-week winning stretch since March. The Nasdaq gained 4.2 percent, its first back-to-back weekly rise since March. And the S&P 500 climbed 2.2 percent. Investors haven't seen a four-week gain for that index since May 2001.
But for the year, the Dow is down 12.4 percent, the Nasdaq is down 30.2 percent and the S&P 500 has lost 19.1 percent.
"Dell did drive enthusiasm -- they raised their sales projection for the current quarter to a record level and you can translate that into meaning someone's making more chips somewhere," said James Luke, director of growth equity management at BB&T Asset Management, which oversees $10 billion.
However, he said, "people are still worried about the economy dipping into recession again, though I'm not in that camp."
The lure of beaten-down stocks also pulled some money out of the bond market, traders said. Treasury prices retreated after a rally earlier this week that drove 10-year note yields to a four-decade low.
Investors bracing for a nasty batch of economic data amid growing worries the recovery has lost its way breathed a sigh of relief after U.S. consumer sentiment, while a touch weaker than expected, stabilized in early August.
"If you look at the economic news that's coming out, it's not all that awful," said Stephen Massocca, head of trading for San Francisco-based investment bank Pacific Growth Equities. "It's simply a slowdown, and I think the market recognizes that."
No. 2 personal computer maker Dell Computer (DELL) offered bulls a little hope after it said it posted a profit. It also raised expectations for revenue in the current quarter, saying it will continue to grab market share from competitors. Dell ticked up 40 cents to $27.54.
"(Investors) are feeling more comfortable that a good, solid company can execute even in a difficult environment and I think that's encouraging," said Jeff Kleintop, chief investment strategist at PNC Advisors.
Analog Devices (ADI) soared 9.3 percent, up $2.50 to $26.50, as investors focused on news its revenue stabilized despite a sluggish semiconductor market.
In addition, its book-to-bill ratio was above 1, indicating that "orders in the current quarter were more than current revenue, which gives you some optimism that revenue is going to increase," said Jack Geraghty, an analyst at Gerard Klauer Mattison & Co.
The Philadelphia Stock Exchange's semiconductor index jumped 6.4 percent.
Wireless stocks also gained after J.P. Morgan raised its investment rating on wireless telephone company Western Wireless Corp. (WWCA) to "buy" from "market perform" based on a significantly revised outlook for the company's roaming business and a strengthening retail subscriber business.
Western's shares surged $1.45 to $3, a gain of 94 percent, and other wireless companies like Nextel Communications Inc.(NXTL) up 66 cents at $6.70, followed suit. The American Stock Exchange's North American telecommunications index rose 3.1 percent.
But Vivendi Universal (V) slumped $1.04, or 9.6 percent to $9.76 after the U.S.-French media company, already slammed by worries it faces a possible cash crunch, was hit by negative reports from two investment banks.
Alcoa Inc. (AA) dragged on the Dow with a drop of 66 cents to $24.77 after Morgan Stanley cut the company's earnings estimates.
Major market gauges are up modestly so far this week after investors snapped up beaten-down shares and investors breathed easier after hundreds of top executives pledged their firms' financial statements were clean.
Retailers retreated after helping boost the market on Thursday. The S&P retail index was down 1 percent.
Gap Inc. (GPS), the largest U.S. specialty apparel retailer, slumped 10.3 percent after it posted a drop in earnings and said its early August sales were below projections. It was down $1.34 at $11.66.
In economic news, the University of Michigan's consumer sentiment index fell modestly to 87.9 in early August, compared with a final 88.1 in July, market sources said on Friday, holding at its lowest level since November.
The index's drop was a bit lower than economists' forecasts for a mild rise to 88.3, but was not nearly as big as traders had speculated just ahead of the report's release.
A government report showed U.S. builders broke ground for new homes at a slower pace in July, the government said on Friday, marking the second straight month that housing starts have fallen, despite low mortgage lending rates.
In a separate report, U.S. consumer prices barely edged higher in July as a sharp drop in clothing prices helped temper rising food, energy and medical care costs, the government said.
Advancing issues outnumbered decliners nearly 5 to 4 on the New York Stock Exchange. Volume was light at 1.26 billion shares, below 1.51 billion on Thursday.
The Russell 2000 index, the barometer of smaller company stocks, rose 5.24, or 1.3 percent, to 395.97.
Overseas, Japan's Nikkei stock average finished Friday up 0.1 percent. In Europe, France's CAC-40 finished off 0.03 percent, Britain's FTSE 100 inched up 0.1 percent, and Germany's DAX index rose 0.5 percent.
Reuters and the Associated Press contributed to this report.