U.S. Stocks Drop, Led by Banks and Tech Companies; Intel Falls

U.S. Stocks Drop, Led by Banks and Tech Companies; Intel Falls

U.S. stocks fell for the first time this week after analysts said Intel Corp. may be hurt by slower computer sales and Federal Reserve Chairman Ben S. Bernanke warned that tighter credit will restrain growth.

Intel, the world's largest chipmaker, slumped the most in eight days. Merrill Lynch & Co. and Goldman Sachs Group Inc. led brokers lower after Lehman Brothers Holdings Inc. predicted more writedowns from credit-market losses. The declines overshadowed a rally in energy shares sparked by faster-than-expected Japanese economic growth that sent Tokyo's Nikkei 225 Index to its biggest gain since 2002.

The Standard & Poor's 500 Index lost 3.27 points, or 0.2 percent, to 1,363.94 at 10:48 a.m. in New York. The Dow Jones Industrial Average slid 45.84, or 0.4 percent, to 12,506.4. The Nasdaq Composite Index decreased 7.42, or 0.3 percent, to 2,366.51. Almost two stocks declined for every one that rose on the New York Stock Exchange.

There are probably more writedowns to come, and that's going to impact things, said Kurt Brunner, who helps manage $1.6 billion at Swarthmore Group Inc. in Philadelphia. It's been nice to see three up days in a row, but I don't think we're in a steady upward trend. You're still going to have pockets of weakness. We're not in a robust, healthy economy.

'Source of Restraint'

Bernanke's comments added to concern that credit-market losses will spread beyond the financial industry after the world's largest banks and securities firms wrote down $146 billion since the beginning of 2007.

More-expensive and less-available credit seems likely to continue to be a source of restraint on economic growth, Bernanke said in prepared remarks to a Congressional committee.

Merrill slid 8 cents to $52.10. Goldman lost 97 cents to $179.21. Financial companies in the S&P 500 lost 1 percent as a group.

Intel lost 55 cents to $20.67.

The key downside risk to our view is a significant deceleration in PC unit growth and lack of meaningful margin expansion, analysts including James Covello and Simon F. Schafer wrote in a report. The brokerage maintained its buy recommendation on the shares, saying Intel's fundamentals remain unchanged.

Micron Technology Inc., the largest U.S. maker of memory chips, and Novellus Systems Inc. were downgraded to sell from neutral at Goldman. Micron lost 18 cents to $7.21. Novellus, a maker of equipment that helps turn silicon wafers into computer chips, fell 41 cents to $24.30.

Energy Rally

Energy shares climbed after Japan's economy grew twice as fast as estimated and U.S. jobless claims fell, sending crude oil up $1.09 to $94.36 a barrel.

Exxon Mobil Corp., the world's largest publicly traded oil company, rose 97 cents to $86.46 and Chevron Corp., the second- largest U.S. oil producer, climbed $1.26 to $83.38.

Comcast Corp. surged $1.33, or 7.5 percent, to $19.14. The largest U.S. cable television operator said fourth-quarter profit rose 54 percent, topping analysts' estimates. The company also said it will buy back $6.9 billion of its stock over two years and pay its first dividend in almost a decade.

MBIA Inc., the world's biggest bond insurer, gained 71 cents to $12.35 after saying it is equipped to survive the slump in prices of mortgage securities and dismissed suggestions that the industry needs a rescue or stronger federal oversight.

A bailout of highly credit-worthy companies who, at most, are at risk of losing the very highest ratings available, is misplaced, MBIA Chief Financial Officer Charles Chaplin said in prepared remarks to be delivered today at a hearing of the House Financial Services subcommittee on capital markets in Washington.

The MSCI World Index added 0.8 percent to 1,457.68 and Europe's Dow Jones Stoxx 600 Index gained 0.8 percent after climbing as much as 1.3 percent.