US blue chips edge upwards

US investors, uncertain about the direction of the economy, sent stocks fluctuating throughout an erratic session today, with prices ending mixed.

Blue chip stocks finished higher while tech stocks extended their slide.

The market struggled to interpret the latest information on manufacturing from the Institute of Supply Management. Although the group’s index of business activity reached a healthy 63.6 in January, up from 63.4 in December, the figure was slightly off analysts’ expectation of 64, and many investors were disappointed.

Stocks did manage a rally during the afternoon, but for the most part, only the big-name stocks held their gains.

The Dow Jones industrial average finished up 11.11, or 0.15, at 10,499.18, after losing more than 50 points in the morning.

Broader stock indicators were mixed. The Standard & Poor’s 500 index was up 4.13, or 0.4%, at 1,135.26, and the Nasdaq composite index finished down 3.00, or 0.2%, at 2,063.15.

Analysts said some of afternoon buying was due to investors realising that earnings reports released over the past two weeks were probably better than they initially thought.

“Overall, we’ve got earnings coming in that are ahead of consensus and great underlying economic fundamentals,” said Scott Wren, equity strategist for AG Edwards & Sons. ”There’s a lot of retail investors who missed a lot of this run and so you have a lot of jump on the bandwagon mentality to help you recover.”

Investors were also buoyed by an influx of cash into the market, due to a top-tier firm pulling money out of bonds and putting it in stocks, according to Keith Keenan, vice-president of institutional trading at Wall Street Access. It was not immediately clear which firm carried out the transactions.

“It was fairly busy in the latest flurry,” Keenan said. ”It’s that kind of market. Little things rouse people pretty quickly.”

International Paper Co reported a fourth-quarter profit of 23 cents per share before one-time charges, beating Wall Street expectations by 5 cents. Shares were up 30 cents at 42.57.

Gannett advanced 4 cents to 85.75 after the media company announced a 3% increase in quarterly profits, meeting analysts’ estimates.

Semiconductor stocks fell after the Semiconductor Industry Association reported an 18% hike in chip sales in 2003. Intel fell 24 cents to 30.28, while Advanced Micro Devices lost 23 cents to 14.63.

Buoyed by a large increase in defence spending in President Bush’s 2.4 trillion budget proposal, defence companies also gained, with Boeing up 73 cents at 42.48 and Raytheon rising 48 cents to 30.99.

Ford Motor Co shed 60 cents to 13.94 after Deutsche Bank cut its rating on the company from “hold” to “sell” due to doubts the vehicle manufacturer could meet earnings goals.

The Russell 2000 index of smaller companies was down 0.22, or 0.04%, at 580.54.