* Bernanke: Recovery weaker but Fed prepared to take steps
* Q2 GDP revised downward, but less than expected
* Intel warns of revenue shortfall but shares rise
* Indexes up 1.7 pct
* For up-to-the-minute market news see []
(Updates to close)
By Leah Schnurr
NEW YORK, Aug 27 (Reuters) - Stocks rebounded to post their
best gains in nearly four weeks on Friday, overcoming initial
skittishness brought on by a revenue warning from Intel and
dour comments from Federal Reserve Chairman Ben Bernanke.
Strong buying interest at a key technical level and
short-covering sparked the market's comeback, and the tone
improved as investors took a more positive view of Bernanke's
comments about the economy and the Fed's readiness to act.
Bernanke told central bankers at a conference in Jackson
Hole, Wyoming the recovery has weakened more than expected butthe U.S. central bank was ready to take further steps if needed
to spur the recovery. For details, see []
The Fed chairman downplayed concerns that the economy might
slip back into recession, reassuring investors spooked by his
recent comments the U.S. economy faced "unusual uncertainty."
"Bernanke struck the right tone to say, 'We know things
have been weaker than expected, but we still think we're going
to get through this,'" said Scott Marcouiller, chief technical
market strategist at Wells Fargo Advisors in St. Louis.
Intel Corp <INTC.O> briefly helped take indexes lower after
the chipmaker warned third-quarter revenue could fall short of
its own estimates by more than $1 billion. But its shares
finished up 1.1 percent at $18.37 after losing more than 15
percent since late July. [].
Shares in Intel were halted twice, once pending news and
once after the stock triggered a circuit breaker.
"Even though the news is bad, the bad news is already in
the valuation. Obviously business isn't going great there, but
the stock is so cheap this doesn't matter," said Stephen
Massocca, managing director at Wedbush Morgan in San
Francisco.
The Dow Jones industrial average <> gained 164.84
points, or 1.65 percent, to 10,150.65. The Standard & Poor's
500 Index <.SPX> jumped 17.37 points, or 1.66 percent, to
1,064.59. The Nasdaq Composite Index <> climbed 34.94
points, or 1.65 percent, to 2,153.63.
Nonetheless, the Dow and S&P 500 racked up their third week
of declines in a row. For the week, the Dow was down 0.6
percent, the S&P lost 0.7 percent, while the Nasdaq gave up 1.2
percent.
The stock market started on a positive note after U.S.
economic growth was revised down in the second quarter, but
still the reading was better than expected. The debate over
whether the economic recovery has hit a soft patch or is headed
for a double-dip recession has plagued the market.
[]
Although the data pointed to an even softer performance in
the third quarter, investors were relieved that the reading was
not as bad as feared.
"Coming into the day, expectations were it could be a
miserable day. It didn't happen, so I have to think there was
huge short-covering behind this rally," Marcouiller said.
Stocks that benefit from a strong economy were among the
day's winners, with Caterpillar Inc <CAT.N> and Boeing <BA.N>
lifting the Dow. Caterpillar rose 3 percent to $65.90 and
Boeing gained 3 percent to $63.16.
Shares of 3PAR Inc <PAR.N> surged 24.7 percent to $32.46
after Hewlett-Packard Co <HPQ.N> again raised its buyout offer
for the data storage company, leapfrogging a bid from Dell Inc
<DELL.O>. HP, a Dow component, dipped 0.6 percent to $38, while
Dell rose 1.2 percent to $11.89. []
Energy and materials shares also led the way up as the
price of oil rose more than 2 percent over $75 a barrel. The
S&P energy group <.GSPE> jumped 2.8 percent and Chevron <CVX.N>
gained 2.2 percent to $74.93.
(Reporting by Leah Schnurr; Editing by Kenneth Barry)
