Stocks slide on Intel forecast, rate worries

Wall Street retreated Thursday as mixed earnings news and rising oil prices prompted investors to take profits from a sharp rally in the prior session. A disappointing forecast from Intel Corp. dragged on the Nasdaq composite index.

Better-than-expected results from Apple Computer Inc. and Motorola Inc. countered a hefty loss at Ford Motor Co. But investors worried about a slowdown in tech spending were rattled by a steep earnings drop at Intel, which gave no indications that conditions would improve in the second half of the year.

Coupled with anxiety about political unrest in the Middle East, the blend of earnings data dampened the market’s cheer over signals that the Federal Reserve may be near an end to its string of interest rate hikes. On Wednesday, the Dow Jones industrials surged 212 points after Fed Chairman Ben Bernanke said the economy was moderating and inflation was contained.

Although Bernanke reiterated his comments Thursday, the pullback reflected fear that high oil prices could fuel inflation and cause the Fed to keep boosting rates. Minutes from the Fed’s June meeting added pressure on stocks late in the day, with the central bank saying there is still uncertainty about future rate hikes.

“From a fundamental perspective, with mixed earnings and positive news from the Fed, this would qualify as somewhat of an aimless market,” said Chris Johnson, manager of quantitative analysis for Schaeffer’s Investment Research. “Technicals will give a good bit of direction to a market that’s otherwise directionless.”

At the close, the Dow declined 83.32, or 0.76 percent, to 10,928.10.

Broader stock indicators also fell sharply. The Standard & Poor’s 500 index dropped 10.68, or 0.85 percent, to 1,249.13, and the technology-laden Nasdaq lost 41.29, or 1.98 percent, to 2,039.42.

Bonds extended their advance, with the yield on the 10-year Treasury note falling to 5.02 percent from 5.06 percent late Wednesday. The U.S dollar was flat against other major currencies; gold prices dipped to about $630 an ounce.

Oil prices bounced back from three days of declines driven by profit taking and an unexpected rise in U.S. reserves reported Wednesday. A barrel of light crude gained 42 cents to settle at $73.08 on the New York Mercantile Exchange.

Wall Street recently has been stymied by an unrelenting wave of negative headlines, giving investors few reasons to put money in the market. Political tension in the Middle East and North Korea catapulted oil prices to record highs; a handful of downbeat earnings reports raised questions about the strain of higher lending costs on economic growth.

Japan’s Nikkei stock average jumped 3.08 percent. Britain’s FTSE 100 lost 0.12 percent, Germany’s DAX index gained 0.12 percent and France’s CAC-40 was higher by 0.38 percent.

Declining issues topped advancers by more than 2 to 1 on the New York Stock Exchange, where preliminary consolidated volume of 2.55 billion shares trailed the 2.83 billion shares that changed hands Wednesday.

The Russell 2000 index of smaller companies sank 18.73, or 2.67 percent, to 683.61.