US stocks: Nasdaq rises on Intel, oil weighs on Dow

NEW YORK - The Nasdaq Composite Index rose today, helped by gains in Intel on expectations the company may cut its chip prices to expand market share

But a rebound in oil prices and a drop in General Electric's stock weighed on both the blue-chip Dow average and the broad Standard & Poor's 500 Index.

Shares of Intel, the world's largest chip maker, rose nearly 2 per cent on expectations it will cut its chip prices aggressively in the coming quarters, undercutting rivals like Advanced Micro Devices, as it attempts to take back market share it lost in recent years, analysts said.

The Nasdaq Composite Index was up 10.01 points, or 0.43 per cent, at 2,324.69. But the Dow Jones industrial average was down 7.21 points, or 0.06 per cent, at 11,122.76. The Standard & Poor's 500 Index was down just 0.38 point, or 0.03 per cent, at 1,287.74.

Intel shares also got a boost from news that the chip maker's Chinese subsidiary has agreed to develop search and other applications in China with Chinese-language internet search service Baidu.com. Intel was up 34 cents at US$19.45 in Nasdaq trading.

Shares of GE, a Dow component, slipped 2.4 per cent to US$33.65 on the New York Stock Exchange. GE, a diversified manufacturer, disappointed some investors when it did not raise its 2006 outlook. The company, which also owns a television network and provides financial services, reported a 9 per cent rise in first-quarter profit.

US crude oil for May delivery rose 70 cents to settle at US$69.32 a barrel, lifted by short-covering and fresh buying ahead of the long holiday weekend.

"A big lift in the price of crude will be bad for the market," said Mike Driscoll, a trader at Bear Stearns & Co.

The yield on the benchmark 10-year US Treasury note climbed above 5 per cent for the first time in nearly four years, reflecting bond investors' concerns about economic growth, rising rates and inflation.

"Despite the spike in yields, everyone is sure the Fed is near the end of the rate-hiking cycle and the focus is shifting to earnings," said Evan Olsen, head of equity trading at Stephens Inc.

The Federal Reserve is focused on keeping inflation curbed, though the pace of economic growth is likely to ease in coming months, Fed Governor Donald Kohn said in remarks prepared for a business meeting in Oklahoma City.

The Dow's biggest lift came from International Business Machines Corp., the world's largest computer services company. IBM's stock scored its biggest one-day percentage advance in more than three months after Lehman Brothers raised its price target to US$92 from US$90.

IBM gained 1.4 per cent to US$81.91, after hitting a session high at US$82.60.

On Nasdaq, shares of Sandisk Corp. jumped 4.3 per cent to US$62.03 after Standard & Poor's announced late on Wednesday that the memory card maker's stock would be added to the benchmark S&P 500 index.

US financial markets will be closed tonight NZ time for Good Friday.

- REUTERS