US STOCKS-Wall St edges lower after disappointing Intel results

Fri Jan 18, 2013 5:00pm GMT

Quotes

   

* Morgan Stanley up more than 5 pct after results

* Weak outlook weighs on Intel, down 6 pct

* U.S. Republicans weigh short-term debt limit increase

* Indexes down: Dow 0.2 pct; S&P 0.3 pct; Nasdaq 0.5 pct

By Angela Moon

NEW YORK, Jan 18 (Reuters) - U.S. stocks edged lower on Friday from a five-year high for the S&P 500 as a weak outlook from tech heavyweight Intel offset a better-than-expected quarterly profit at Morgan Stanley.

Shares of Intel Corp slumped 6.3 percent to $21.25 a day after it forecast quarterly revenue below analysts' estimates and announced plans for increased capital spending amid slow demand for personal computers.

"Intel earnings weren't that bad, although their revenue was weak. It sparks fears about not only the company but about the whole PC sector, and that's pressuring the market today," said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

The Intel results were offset somewhat by a gain of more than 7 percent in shares of Morgan Stanley, which reported a fourth-quarter profit after a year-earlier loss, helped by higher revenue at the bank's institutional securities business. Its stock jumped 7.4 percent to $22.29.

Overall, S&P 500 fourth-quarter earnings rose an estimated 2.5 percent, according to Thomson Reuters data. Expectations for the quarter have dropped considerably since October, when a 9.9 percent gain was estimated.

The Dow Jones industrial average was down 19.89 points, or 0.15 percent, at 13,576.13. The Standard & Poor's 500 Index was down 4.58 points, or 0.31 percent, at 1,476.36. The Nasdaq Composite Index was down 15.90 points, or 0.51 percent, at 3,120.10.

On Thursday, the S&P 500 rose to its highest since late 2007, and that could prompt investors to lock in recent gains, analysts said.

But despite the day's decline, market sentiment was still positive on speculation that chances were better of avoiding a debt ceiling fight in Washington. House Republicans signaled on Thursday they might support a short-term extension of U.S. borrowing authority next month.

"The debt ceiling issue is sort of out of the news. The market has definitely become complacent. And we all know that the issue will be dealt with, we just need to find out when. If December is any guide, they are going to leave it up to the last minute so the market is definitely more complacent than it should be for now," Ghriskey said.

Economic data from China provided some support to the market, though the focus remained on U.S. corporate earnings. The country's economy grew at a modestly faster-than-expected 7.9 percent in the fourth quarter, the latest sign the world's second-biggest economy was pulling out of a post-global financial crisis slowdown which saw it grow in 2012 at its weakest pace since 1999.

General Electric reported a better-than-expected rise in earnings, spurred by robust demand in China and oil-producing countries. Shares were up 2.9 percent to $21.91.

Despite the gains by Morgan Stanley, financial stocks sagged as Capital One Financial reported disappointing profit. Capital One slumped 8.1 percent to $56.60, while the KBW bank index slipped 0.8 percent.

Research In Motion climbed 5.6 percent to $15.74 after Jefferies Group boosted the BlackBerry maker's rating and price target.

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