Stocks mixed as market rally loses steam; better sales forecast from Intel boosts tech stocks

Stocks mixed after Intel raises sales forecast

NEW YORK — Stocks were searching for direction Friday as investors hesitate to extend the market’s recent rally despite an improved outlook from Intel Corp.

Major stock indicators got an initial boost after the world’s largest maker of computer chips raised the top end of its sales forecast for the current quarter from $8.9 billion to $9.2 billion.

The Intel news lifted technology stocks but wasn’t enough to keep the entire market afloat, and stocks reverted to the back-and-forth pattern that has defined trading for much of this past week.

Caution has returned to the market, dampening some of the euphoria around Federal Reserve Chairman Ben Bernanke’s upbeat assessment of the economy that helped send stocks up about 2 percent last week. The major indexes are still on track for their sixth weekly advance in seven weeks, but the gains have been dwindling.

Investors are worried that after sending stocks up more than 45 percent since early March, the market’s rally may have run its course. And with many traders taking August vacations, there aren’t enough buyers in the market to take stocks higher.

“The market is kind of wallowing,” said Stephen Carl, principal and head of equity trading at The Williams Capital Group. “It’s hard to determine which way things are going to go. It might be hard to sustain what is going on.”

Trading is expected to remain choppy through at least the next week as summer on Wall Street winds to a close.

The Dow Jones industrial average fell 18.29, or 0.2 percent, to 9,562.34. The Standard & Poor’s 500 index rose 0.34, or 0.03 percent, to 1,031.32, while the tech-heavy Nasdaq composite index rose 9.54, or 0.5 percent, to 2,037.27.

Declining issues narrowly outpaced advancers on the New York Stock Exchange, where volume came to a light 380.1 million shares, compared with 315.1 million at the same time on Thursday.

In other trading, the Russell 2000 index of smaller companies fell 1.48, or 0.3 percent, to 582.29.

Intel’s upbeat report came after computer maker Dell Inc. posted better-than-expected results for its May-July quarter late Thursday. While sales continued to fall because of reduced spending by consumers and businesses, Dell said it has seen signs of improvement.

Intel shares rose 92 cents, or 4.7 percent, to $20.39, while Dell added 67 cents, or 4.3 percent, to $16.32.

Among the economic data Friday, a Commerce Department report said consumer spending rose 0.2 percent in July, which was in line with economists’ expectations.

Growth in spending and consumer confidence has been slowed by rising unemployment and weak income growth. Spending got a boost during the month from an increase in auto sales tied to the popular Cash for Clunkers program. Recent economic data has largely benefited from the government’s various stimulus programs, and investors have been worried about how well the economy will fare without government support.

The latest report also said personal income was flat in July. Economists had expected a 0.2 percent increase. Personal income has been hammered during the recession as employers cut payrolls and force workers to take unpaid days off to hold down wage costs.

Bond prices were mixed. The yield on the 10-year Treasury note rose to 3.47 percent from 3.46 percent late Thursday.

Oil prices moved higher, rising 76 cents to $73.25 a barrel on the New York Mercantile Exchange.

The dollar fell against other major currencies, while gold prices rose.

Overseas, Japan’s Nikkei stock average rose 0.6 percent. In afternoon trading, Britain’s FTSE 100 rose 1.0 percent, Germany’s DAX index gained 0.7 percent, and France’s CAC-40 climbed 1.2 percent.