US stocks close mixed

Wall Street had an indecisive session today, closing mixed as better-than-expected earnings from Apple Computer and Citigroup were again eclipsed by investors’ growing anxiety over interest rates.

Financial and tech shares showed particular weakness, while large drug stocks posted gains as investors sought safety in consumer staples, energy and health care, which have historically done well when rates are rising.

The market’s muted reaction to earnings news did not surprise analysts, who said share prices already reflect most of the gains that were expected for the first quarter.

“The markets were too enthusiastic, too far ahead of earnings, and they had not factored in other influences – a close election, geopolitics, interest rate changes – and the result is this volatility,” said Subodh Kumar, chief investment strategist for CIBC World Markets.

The Dow Jones industrial average rose 19.51, or 0.2%, to 10,397.46.

The broader indexes were mixed. The Nasdaq composite index declined 22.68, or 1.1%, to 2,002.17, largely weighed down by semiconductor issues. The Standard & Poor’s 500 index was up 0.67, or 0.1%, at 1,128.84.

Buyers were also scarce in the bond market, where the yield on the 10-year Treasury note rose to 4.40%, from 4.37% on Wednesday.

The selling was not dramatic, compared to recent weeks, but bond prices were still ”moving in the wrong direction”, said Brian Pears, head equity trader at Victory Capital Management in Cleveland.

“It’s fair to say equity traders have become somewhat obsessed with the performance of the 10-year note,” Pears said. “The macro issues, what’s happening with the economy, is swamping the more micro issues of earnings for individual companies, which by and large have been fantastic.”

The stock market has skidded this week as investors contrast good earnings and equity fundamentals against fears about what recent economic data will mean for interest rates. Strong retail sales and inflation worries have forced analysts to rethink the idea that the Federal Reserve will keep rates at their current lows until next year.

Pharmaceutical stocks were among the day’s biggest gainers, and kept the Dow from sinking.

Merck & Co was up 1.54 at 46.98, Pfizer added 1.53 to 37.34 and Johnson & Johnson gained 1.92 to 54.52.

In contrast, investors continued to batter rate-sensitive financial stocks. Citigroup, the largest US financial institution, lost 1.03 to 49.92, despite soundly beating analysts’ estimates and saying it expects continued growth as the economy strengthens.

Chip stocks were also vulnerable. Advanced Micro Devices lost 90 cents to 16.22, although it beat expectations.

Texas Instruments fell 66 cents to 28.02 despite matching Wall Street’s profit expectations, posting strong semiconductor sales and issuing a modestly bullish forecast. The company, which makes chips used in half the world’s mobile phones, has lagged since its biggest customer, Nokia, warned of a sales slowdown.

Among the biggest tech gainers, Apple soared 2.66, or 10%, to 29.30 as huge demand for its iPod portable digital music players helped it easily beat Wall Street expectations. Computer sales also continued to boost profits, but Apple’s worldwide share of the PC market has declined in recent years.

Advancing issues slightly outnumbered decliners on the New York Stock Exchange. Volume was light.

The Russell 2000 index, which tracks smaller company stocks, was down 1.72, or 0.3%, at 580.30.