Updated from 4:11 p.m. ESTStocks ended to the downside after enduring wide swings Friday, a session that was marked by a sales warning from chip giant Intel ( INTC) and a strong showing by the U.S. services sector. The Dow Jones Industrial Average lost 3.92 points, or 0.04%, to close at 11,021.59. The index was as low as 10,985 and as high as 11,107. The S&P 500, which had a 13-point trading band, slipped 1.91 points, or 0.15%, to 1287.23, and the Nasdaq Composite shed 8.51 points, or 0.37%, to 2302.60. "Today was one of the days where everything was negative," said Art Hogan, chief market analyst with Jefferies. "The market did hold in there pretty well, though. We're finishing up the week showing how much volatility we should expect over the next few weeks. We should be pleased we ended up where we did because it could've been a lot worse." About 1.57 billion shares changed hands on the New York Stock Exchange, and volume on the Nasdaq was 2.42 billion shares. Decliners outpaced advancers 9 to 7. Intel was the corporate story of the day. The company reduced its first-quarter revenue estimate to a range of $8.7 billion to $9.1 billion, citing lower-than-expected demand and a slight market-share loss. In January, the semiconductor maker said it expected revenue of $9.1 billion to $9.7 billion, a forecast that at the time was well short of Wall Street's $10 billion consensus estimate. Shares of Intel fell 17 cents, or 0.8%, to close at $20.32. Still, the shares finished above the worst level of the session, having touched a 52-week low of $19.86 during morning trading. For the week, the Dow gave up about 40 points, and the Nasdaq added around 25 points. The S&P lost 2 points, snapping a three-week run of gains.
Dragged lower by Intel's loss, the Philadelphia Stock Exchange Semiconductor Sector index ended down 1.6%. Rival Advanced Micro Devices ( AMD), which has been chipping away at Intel's dominance, lost $1.82, or 4.4%, to close at $39.51. Some of the pressure from Intel was relieved after the Institute for Supply Management said its services index for February rose to a reading of 60.1. Economists had expected the index to advance to 58.0 from January's 56.8. "The ISM Services data saved us from the Intel news this morning," said Edgar Peters, chief investment officer with Pan Agora. "With Intel there has been a lot of negative news that was already built in, so some of it may have been priced in. Investors now see the services sector is still growing, which is relieving the pressure the market has been under." After reaching a session high Friday afternoon, the Dow was pressured at the close by losses of 2.7% in Hewlett-Packard ( HPQ) and 1% in both Verizon ( VZ) and AT&T ( T). The 10-year Treasury was down 12/32 in price to yield 4.68% -- 7 basis points below the two-year note -- while the dollar rose against the yen and fell against the euro. Overseas markets were mostly lower, with London's FTSE 100 adding 0.4% to 5859 and Germany's Xetra DAX down 1.1% to 5721. In Asia, Japan's Nikkei slid 1.6% overnight to 15,663, while Hong Kong's Hang Seng lost 0.5% to 15,802. Japanese markets were roiled after the government reported a 0.5% rise in core inflation for January. The number was slightly higher than expected, and it contributed to a belief the Bank of Japan is ready to start raising official interest rates for the first time in five years. Japan's easy money policies are widely viewed as a source of liquidity for international stock markets, and a tightening could have bearish implications abroad.
Speaking to reporters in Tokyo, however, Japanese Prime Minister Junichiro Koizumi said, "Although we are seeing signs that deflation is easing, we can't say Japan's deflation is over," according to Bloomberg. Paul Mendelsohn, chief investment strategist with Windham Financial, said "this improves the probability that the Bank of Japan will decide to reduce the amount of liquidity that it adds to the economy when policy makers meet on March 9, as a forerunner to lifting interest rates from the current near-zero level." Oil was higher, with April crude finishing up 31 cents to $63.67 a barrel, even as European diplomats reported no agreement following negotiations with Iran over its recently restarted nuclear research plan. Concerns that Iran might face economic sanctions led oil to a three-week high on Thursday. Also on the economic front, the University of Michigan's revised consumer sentiment reading for February came in at a reading of 86.7. February's revised number was below expectations, as well as January's final reading of 91.2. Elsewhere, General Electric ( GE) used the occasion of a big secondary offering for former unit Genworth ( GNW) to affirm first-quarter profit guidance of 38 cents to 40 cents a share. The Thomson First Call consensus is 39 cents. Shares of GE rose 21 cents, or 0.6%, to $33.06. Google ( GOOG) added 0.5% a day after CEO Eric Schmidt told analysts the Internet search engine has room for growth. Shares have now recovered from the 7% decline on Tuesday after CFO George Reyes said Google would have problems growing as quickly. Google finished up $1.73 to $378.18. Starbucks ( SBUX) said February same-store sales rose 8% from a year ago, thanks to brisk sales of seasonal coffees and enhanced food offerings. Total sales surged 25% to $585 million last month. Starbucks gained 13 cents, or 0.4%, to $35.58.
Wendy's ( WEN) said it is exploring a possible sale or spinoff of its underperforming Baja Fresh Mexican Grill business. Wendy's, which is about to complete the spinoff of its Tim Hortons chain, tacked on $2.10, or 3.6%, to close at $60.54. Novellus ( NVLS) said first-quarter bookings could be slightly stronger than expected. In a midquarter update, the chip-equipment maker said it expects to record orders in the quarter that are up 14% to 20% from the previous period, up from its prior guidance of 10% to 20%. Shares lost 98 cents, or 3.6%, to $26.37. Software maker Novell ( NOVL) said first-quarter sales fell 5.5% from last year, as the company continued to struggle to compete with Red Hat ( RHAT). Novell's quarterly earnings were slightly better than expected, but second-quarter guidance was soft. Novell dropped $1.63, or 17.1%, to $7.90. Among analysts calls, Friedman Billings Ramsey raised Exxon Mobil ( XOM) to outperform from market perform, citing better-than-expected data on the company's oil reserves. Friedman's new price target is $72, about 18% better than its Thursday close. Exxon Mobil was higher by 13 cents, or 0.2%, to $60.98. Banc of America Securities cut Ciena ( CIEN) to sell from neutral, citing valuation. The downgrade comes a day after the communications-equipment maker posted a narrowing first-quarter loss and provided second-quarter revenue guidance above the Thomson First Call average consensus. The stock lost 9 cents, or 1.9%, to $4.55.