By Benjamin Pimentel, MarketWatch
SAN FRANCSICO (MarketWatch) -- Shares of Intel Corp. and International Business Machines 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% to $27.94 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 3% to $202.97, 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.
Apple Inc. (AAPL) shares slipped a fraction.
On the other hand, Yahoo (YHOO) shares gained 3% as investors welcomed a glimmers of hope from the struggling Web portal, as the company beat Wall Street's earnings projections.
Also giving the sector a lift were shares of Seagate Technology (STX) which were up 5% 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 4.4%.
But these gains were not enough to keep the tech sector afloat, as the Nasdaq Composite Index (RIXF) gave up 14 points, to 3,029.
The Morgan Stanley High Tech 35 Index (SOX) was also down a fraction, while the Philadelphia Semiconductor Index (SOX) lost 1.1%.