(Updates with Bernanke's speech and Intel outlook)

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks rose in volatile
trading Friday, shrugging off initial losses after the
Federal Reserve chairman said the recovery has softened more
than expected and Intel Corp warned about revenue.

Major averages fell sharply immediately after Fed Chairman
Ben Bernanke's comments and the Intel forecast -- which came
within minutes of each other.

Bernanke told central bankers at a conference in Jackson
Hole, Wyoming, the recovery had softened more than expected and
that the central bank was ready to take further steps if needed
to spur the stumbling economy.

Technology bellwether Intel Corp , a Dow component,
said third-quarter revenue would be below its previous outlook.
The stock fell 0.3 percent to $18.13.

"Intel maybe kind of sums it up if you want to look at why
the market is up," said Stephen Massocca, managing director at
Wedbush Morgan in San Francisco. "The economy stinks, but at
this point, is that discounted in the market that the economy
stinks? And have stocks gotten too cheap?"

The Dow Jones industrial average was up 58.65
points, or 0.59 percent, at 10,044.46. The Standard & Poor's
500 Index was up 5.27 points, or 0.50 percent, at
1,052.49. The Nasdaq Composite Index was up 6.98
points, or 0.33 percent, at 2,125.67.

Markets opened higher after a better-than-expected reading
on second-quarter gross domestic product, though the report
showed GDP slowed more sharply than initially thought.

"The GDP number was a hurdle cleared, but we'd still leave
the party hats in the box," said John Stoltzfus, senior market
strategist at Ticonderoga Securities in New York. "It's a
near-term blow to the double-dip crowd, but the economy clearly
remains weak."

3PAR Inc surged 21.4 percent to $31.61 after
Hewlett-Packard Co again raised its buyout offer for
the data storage company, leapfrogging a bid from Dell Inc
. HP, a Dow component, lost 1.5 percent to $37.64,
while Dell rose 1.6 percent to $11.94.
(Additional reporting by Chuck Mikolajczak; editing by
Jeffrey Benkoe)