NEW YORK (CNN/Money) - Semiconductor stocks were at the head of a broad-based rally in the technology sector Friday as investors found some hope in Intel's updated business forecast as well as in the latest employment figures.

The Nasdaq composite index rose 44.29 points, ending the session 3.5 percent higher at 1,295.29. For the week, the tech-laden index gained slipped 19 points from last Friday's closing level of 1,314.85.

Shares of Intel (INTC: up $1.11 to $16.22, Research, Estimates), the No. 1 supplier of microprocessors for personal computers, were the most actively traded on Nasdaq Friday, ending the session $1.01 higher at $16.12, a 6.7 percent gain on the day.

That stock had been pressured earlier in the week as Wall Street braced for the company's regularly scheduled mid-quarter financial update, which executives hosted after the close of trading Thursday.

The company lowered the top-end of its third-quarter revenue forecast but kept it within its previously stated range. Intel executives said they now expect to log revenue between $6.3 billion and $6.7 billion. Previously, they had been targeting a range between $6.3 billion and $6.9 billion.

At the same time, they stood by their previous target for gross margin, a key measure of profitability, saying they expect it to be in a range between 49 and 53 percent. Steps the company has recently taken to pare costs are behind the more stable gross margin view, executives said.

Intel's stock had come under pressure earlier this week in anticipation of the mid-quarter update as several analysts issued cautious research notes. Even with Friday's rally, Intel shares ended the week below last Friday's closing level of $16.67.

Thursday's news was met with mixed reviews from Wall Street brokerages. But investors' relief that it wasn't worse, as well as a stronger-than-expected jobs report that sparked a broader rally in the market, helped boost the company's shares on Friday.

Lehman Brothers upgraded its rating on Intel's shares on Friday to "equal-weight" from "underweight," advising clients that Intel is likely to hit what the firm characterized as now more realistic financial targets.

At the same time, Merrill Lynch reiterated a "neutral" rating on Intel shares, saying it expects a short-lived rally on the heels of the company's latest guidance but advising clients to remain cautious.

"Bulls hoping for a more substantial move in Intel may be disappointed," Merrill said. "There was nothing in Intel's comments that can be used to support an improved outlook for either the third or fourth quarter."

The stocks of most other semiconductor companies also moved sharply higher. The Philadelphia Stock Exchange's semiconductor index rose 13.11 points to 288.47, a 4.8 percent gain on the day.

Advanced Micro Devices (AMD: up $0.05 to $8.04, Research, Estimates), which ranks a distant second to Intel in PC processor sales, was among those gaining ground, its shares finishing modestly higher after showing more strength earlier in the session. Computer memory chip maker Micron Technology (MU: up $0.55 to $17.75, Research, Estimates) also gained, rising 2.1 percent.

Among the biggest gainers were shares of Altera (ALTR: up $0.53 to $10.15, Research, Estimates), LSI Logic (LSI: up $0.38 to $7.74, Research, Estimates) and Xilnx (XLNX: up $1.15 to $18.40, Research, Estimates), each of which specializes in programmable logic circuits.

Shares of Applied Materials (AMAT: up $0.87 to $12.94, Research, Estimates), the largest supplier of the equipment used to manufacture semiconductors, ended the session 7.2 percent higher. Chip-equipment makers Novellus Systems (NVLS: up $1.47 to $23.46, Research, Estimates), KLA Tencor (KLAC: up $2.08 to $32.04, Research, Estimates) and Teradyne (TER: up $0.91 to $12.42, Research, Estimates) also ended comfortably in the plus column.

Computer hardware stocks also moved mostly higher Friday, with a few exceptions.

Hewlett-Packard (HPQ: up $0.65 to $13.50, Research, Estimates) was among those whose shares rose sharply, ending the session 5.1 percent higher. Shares of Dell Computer (DELL: up $0.90 to $26.10, Research, Estimates) also gained, ending the day up 3.6 percent.

Other computer hardware makers whose shares rose Friday included: IBM (IBM: up $1.02 to $73.20, Research, Estimates); Apple Computer (AAPL: up $0.20 to $14.38, Research, Estimates); Brocade Communications (BRCD: up $0.25 to $13.94, Research, Estimates); Emulex (EMLX: Research, Estimates); and McData (MCDT: up $0.13 to $8.94, Research, Estimates).

Among those computer hardware makers whose shares ended in the minus column were PC maker Gateway (GTW: down $0.21 to $3.04, Research, Estimates), which slid 5.9 percent, and EMC (EMC: down $0.48 to $6.41, Research, Estimates), the No. 1 maker of data-storage systems, which fell 6.5 percent on the day.

The Goldman Sachs computer hardware index ended the session 2.31 points higher at 150.94, a 1.6 percent gain on the day.