Stocks Decline Despite Intel’s Upbeat Outlook

Wall Street pulled back Friday despite Intel’s upbeat sales outlook, but key indexes still finished the week higher.

In the bond market yields were little changed, while the suddenly struggling euro fell further against the dollar.

The stock market’s advance ran out of gas as profit takers took control, after heady gains in many issues this week that had pushed major indexes to at least one-year highs.

The Dow Jones industrial average lost 74.81 points, or 0.8%, to 9,348.87 Friday. The Dow had rallied at the start on Intel’s report, but quickly sold off.

Intel traded as high as $29.04 but closed up $1 at $27.39.

The broader Standard & Poor’s 500 slid 10.21 points, or 1%, to 993.06.

The technology-dominated Nasdaq composite gave up 12.23 points, or 0.7%, to 1,765.32.

The Dow had reached a 14-month high Tuesday and Nasdaq was at a 16-month high Thursday.

“The bulls look a little tired here,” said Bryan Piskorowski, market commentator for Prudential Securities in New York.

Falling stocks outnumbered winners by 2 to 1 on the New York Stock Exchange and on Nasdaq.

For the week, however, winners were on top by about the same 2-1 ratio, and the Dow edged up 0.3%, the S&P; added 0.2% and Nasdaq jumped 3.7%.

The market has been buoyed this summer by upbeat data that suggest the economy is accelerating. That has kept many investors focused on stocks even as bond yields have jumped.

On Friday, Treasury bond yields were little changed after surging Thursday following several bullish economic reports. The five-year T-note yield ended at 3.46%, up from 3.44% on Thursday and a one-year high.

The 10-year T-note was at 4.47%, down from 4.48% on Thursday. It was 4.53% a week ago.

Stronger economic data have made people question how long the Federal Reserve can hold short-term rates at current 45-year lows, Craig Coats, co-head of fixed-income at Keefe, Bruyette & Woods Inc. in New York, told Bloomberg News.

“The [bond] market is not going to wait for the Fed. When the Fed goes to tighten, it’s not going to be a surprise. It’s going to follow the market,” he said.

Action in currency markets suggests foreign-exchange traders believe the U.S. economy’s rebound is sustainable.

The dollar had its biggest weekly gain versus the euro in more than two years, surging 3.5%, on signs U.S. growth is picking up as Europe’s economy struggles to revive.

The euro ended Friday at $1.089, down from $1.093 on Thursday. The euro peaked at $1.19 on May 29.

“Sentiment has definitely shifted to the dollar,” Larry Brickman, a currency strategist at Banc of America Securities in New York, told Bloomberg News. “More and more money is flowing into the U.S. as the economy improves.”

In other markets, Japan’s main stock index rose 4.2% for the week, to 10,281.17, while the German market gained 3% and the Mexican market rallied 1%.

Among Friday’s highlights:

* Drug stocks were weak after Schering-Plough late Thursday lowered profit forecasts and slashed its dividend to conserve cash. Schering sank $1.52 to $14.96, Merck lost $1.05 to $50.27, Pfizer gave up 24 cents to $29.55 and Lilly lost 76 cents to $62.80.

* Retailers’ shares were mixed. Kmart jumped $1.95 to $28.25 and Nordstrom surged $1.07 to $25.07, but Sears lost $1.02 to $43 and Ann Taylor sank $1.47 to $32.28.

* Internet-related stocks weakened. Yahoo fell $1 to $31.82 and DoubleClick slipped 38 cents to $10.89.

* Profit taking hurt industrial and commodity stocks. Weyerhaeuser fell 98 cents to $57.92, Deere lost 96 cents to $57.10 and Alcoa slid 46 cents to $28.13.

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Market Roundup, C4-5