Intel lowers guidance

Chip giant Intel lowered its sales forecast for the current quarter amid weaker-than-expected buying of computers, but Wall Street rallied after reassuring comments from the head of the Federal Reserve.

Intel is lowering its sales guidance for the current quarter. The chip giant says customers in developed economies are not buying personal computers as fast as they were earlier this year.

That warning follows up an admission by the head of the Federal Reserve. In a speech at a Fed retreat in Jackson Hole, Wyoming, Ben Bernanke said the recovery was slowing faster than most at the Fed thought it would. But he offered this reassurance: the Fed is prepared to take "unconventional measures" if the recovery rapidly deteriorates further.

Meanwhile, a revised reading shows the economy grew much slower in the second quarter than first announced thanks to a sharp rise in imports.

And consumer sentiment fell in late August as shoppers continue to worry about the labor market, according to a Thomson Reuters/University of Michigan survey.

Some economists are downwardly revising growth expectations, but not going as far as calling for a double-dip recession.

Allen Sinai of Decision Economics.

"We are tracking currently south of 1%; it"s early in the third quarter data wise, that could go up and could also go down but if it tracks as I think it will, where we are now and given our outlook for the 4th quarter which is 1-1/2 to 2%, it looks like we"ve entered a growth recession."

In other news: the battle for 3PAR has now reached its third round of bids. HP has raised its offer to $2 billion, once again trumping an offer by Dell.

Investors focused on Bernanke"s reassurance, which powered Wall Street to its best one-day close in about four weeks.

But that wasn"t enough to prevent the market from sliding for a third straight week.

In Friday action in Europe: stocks rallied as investors found enough courage to do some buying.

Conway Gittens, Reuters