By Benjamin Pimentel, MarketWatch
SAN FRANCSICO (MarketWatch) -- Shares of Intel Corp. and IBM Corp. slipped Wednesday, leading a tech sector retreat and weighing down the Dow Jones Industrial Average after the two giants' reports disappointed Wall Street.
Intel (INTC) slid 2.4% to $27.79 after the world's biggest chipmaker beat Wall Street estimates, but its gross margin forecast for the current quarter was a tad lower than expected.
"The company beat numbers by a bit in the first quarter, and raised revenue estimates for the second quarter," Bernstein Research analyst Stacy Rasgon said in a note. "However, we get the feeling that the investment community might have anticipated a larger raise than was offered."
IBM (IBM) shares shed more than 2% to $202.34, after the company reported flat sales.
In a note, Sterne Agee's Shaw Wu wrote, "IBM's global and diverse business model continues to allow it to deliver strong results despite a tougher macroeconomic environment."
But he also cited tough year-over-year comparisons especially in Big Blue's hardware business, and the company's high exposure in the financial services market.
On the other hand, Yahoo (YHOO) shares gained 3.2% as investors welcomed a glimmers of hope from the struggling Web portal, as the company beat Wall Street's earnings projections.
Apple Inc. (AAPL) shares rose 0.8%, extending the prior session's rebound.
Also giving the sector a lift were shares of Seagate Technology (STX) which were up 4.3% after the hard disk drive maker posted a surge in profit.
In a sign of recovery for the hard disk drive industry, which was hurt by the impact of the Thailand flooding disaster, rival Western Digital (WDC) also saw its shares rise 4.5%.
But these gains were not enough to keep the tech sector afloat, as the Nasdaq Composite Index (RIXF) gave up 4 points, to 3,038.
The Morgan Stanley High Tech 35 Index (SOX) was also down a fraction, while the Philadelphia Semiconductor Index (SOX) lost 1.4%.