Intel warning sends stocks swinging

US stocks ended slightly lower yesterday as Intel's 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 per cent at $20.32 on Nasdaq, after hitting a 17-month low of $19.86 earlier in the day.

The Dow Jones industrial average dipped 3.92 points, or 0.04 per cent, to end at 11,021.59. The Standard & Poor's 500 Index was down 1.91 points, or 0.15 per cent, at 1,287.23. The Nasdaq Composite Index was down 8.51 points, or 0.37 per cent, at 2,302.60.

For the week, the Dow industrials fell 0.36 per cent and the S&P 500 slipped 0.17 per cent, while the Nasdaq gained 0.68 per cent.

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.

Yesterday's trading session proved more volatile in the wake of Intel's warning, with all three major US stock indexes gyrating back and forth until the market closed, traders said.

But even with the volatility, investors snapped up select stocks, including Boeing, whose shares rose 0.8 per cent, 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 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, which finished up 0.6 per cent, or 24 cents, at $41.72, and heavy equipment maker Caterpillar, up 0.4 per cent, or 27 cents, at $74.61, both in NYSE trading.

These stocks also were were among the Dow's biggest gainers.

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 seven stocks that rose on the NYSE, while on Nasdaq, decliners outnumbered advancers by a ratio of three to two.