Dow fluctuates as investors weigh earnings news

Investors on Wall Street left stocks little changed today with blue chips slightly higher and tech stocks nudging the Nasdaq composite index lower.

Many investors chose to look at the economy’s strengths – a major banking merger, a strong 2004 outlook from International Business Machines Corp and a modestly improving labour market – instead of focusing on drearier topics.

“Any kind of news that appears to be bad news, there’s a bullish argument to spin it the other way,” said Keith Keenan, vice president of institutional trading at Wall Street Access. “This is a very short-term market that wants to see positive news.”

Others decided to lock in profits from the market’s 2004 rally, touching off an early round of selling that never quite went away.

The Dow Jones industrial average closed up 15.48, or 0.2%, at 10,553.85. The Dow was down as much as 54 points earlier in the day.

Broader stock indicators were narrowly mixed. The Nasdaq composite index ended down 2.05, or 0.1%, at 2,109.08, while the Standard & Poor’s 500 index finished up 0.81, or 0.07%, at 1,131.33.

IBM led the gainers, trumping Wall Street’s earnings expectations and voicing a very positive outlook for the year.

This mollified investors concerned about Intel Corp’s more timid first-quarter outlook on Wednesday.

IBM closed up 3.71dollars at 94.02dollars, having flirted with its 52-week high earlier in the day, while Intel was down 33 cents to 33.06 dollars.

Thursday’s session illustrated the power that future earnings reports will have in setting the mood of the market in coming weeks, according to Michael Sheldon, chief market strategist at Spencer Clarke LLC.

“We’ll have half the S&P 500 reporting by the end of January,” Sheldon said. “Optimism may have gotten ahead of itself. If we see more outlooks like Intel, then you could see a brief pullback.”

Some investors, however, looked to the proposed 58 billion dollar merger between J.P. Morgan Chase and Bank One Inc announced on Wednesday. Bank One closed up 5.20 dollars at 50.42dollars, while J.P. Morgan Chase fell 30 cents to 38.92 dollars.

“That’s a definite signal that the Street really likes this deal,” Keenan said. “The valuation is fair, the deal makes sense. This helps the whole sector.”

The government’s latest economic reports were mixed, allowing investors to pick and choose their personal barometers.

Consumer prices were up 0.1% in December, a slight rise that met analysts expectations. First-time unemployment claims fell by 11,000, with the four-week average of new claims at its best level in three years.

Retail sales climbed only 0.5% in December, falling below expectations and offsetting strong gains in November.

With corporate fundamentals strong, the day-by-day earnings reports and economic data will create short-term uncertainly but little long-term damage, said Doug Sandler, chief equity strategist for Wachovia Securities.

“There’s a lot of hope pinned on earnings, but that’s a very short-term view,” Sandler said. “I’m comfortable with closing my eyes and getting through earnings season. You know the recovery’s coming. If it doesn’t come through this quarter, it’ll come through the next quarter or the one after that.”

Declining issues barely outpaced advancers on the New York Stock Exchange. Volume was heavy.

The Russell 2000 index of smaller companies finished up 0.12, or 0.02%, at 586.24.