Semiconductor equipment stocks were buffeted by a slew of downgrades by Merrill Lynch, which cut its midterm ratings on chip gear makers KLA-Tencor Corp. and Applied Materials Inc, citing Sun's dim forecast. It also cut its rating on Novellus Systems Inc.
Reactions were mixed in the recently pummeled sector. KLA-Tencor slipped US$0.75 to US$32.87, Applied Materials fell US$0.08 to US$13.36 but Novellus rose US$0.17 to US$24.46.
The S&P is still up about 15 percent since it slammed down to a five-year low on July 23. Investors have put aside some of their jitters about corporate corruption and taken some comfort in the Federal Reserve's decision earlier this month to leave the door open to further interest rate cuts.
After the open, the University of Michigan's final August consumer sentiment index fell slightly to 87.6 from 88.1 in July and a mid-month reading of 87.9, market sources said on Friday. That was below expectations for a rise to 88.3.
The National Association of Purchasing Management-Chicago index rose to 54.9 in August from 51.5 in July. It was the seventh consecutive reading above 50, which points to an expanding regional manufacturing economy. A reading below 50 signals contraction.
Bonds
The bond market closed at 2pm on Friday in New York and will remained closed tomorrow.
The benchmark 10-year note rose 3/32 to 101.31, leaving yields at 4.13 percent from 4.14 percent on Thursday. Two-year notes were at 99/31, yielding 2.15 percent, unchanged from Thursday. The 30-year bond was 17/32 firmer at 106-25/32, yielding 4.93 percent from 4.96 percent. Five-year notes rose 3/32 to 100-9/32, for a yield of 3.19 percent from 3.22.
Currency
The dollar rose against the euro to US$0.9820, up around 0.20 percent from the prior day's close.
The dollar firmed against the yen to Japanese yen 118.37, up 0.14 percent on the day.
Crude oil
NYMEX crude futures ended slightly higher on light short-covering amid doubts whether OPEC will raise production next month. NYMEX October crude settled US$0.06 higher at US$28.98 a barrel.
Natural gas
Natural-gas futures rose as traders bought contracts on the possibility that a tropical storm in the Atlantic Ocean will disrupt fuel production in the Gulf of Mexico.
Speculation that the storm could develop into a hurricane and move into the Gulf prompted traders to buy more futures before a holiday weekend in the US, analysts said. About one-fourth of US natural-gas production comes from the Gulf.
"You do have a tropical storm out there, and even though it's still too early to make a prediction on where it will go, you have to be cautious going into a three-day weekend," said Bill O'Grady, director of fundamental futures research at AG Edwards & Sons Inc.
Natural gas for October delivery rose US$0.046, or 1.4 percent, to US$3.296 per million British thermal units on the New York Mercantile Exchange.
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