NEW YORK (CNN/Money) - Blue chips slipped and the broader market was flat in choppy trading Thursday as investors struggled to digest mixed earnings news after a two-session rally.

The Dow Jones industrial average (down 31.19 to 10,467.40, Charts) lost 0.3 percent, according to early tallies.

The Standard & Poor's 500 (up 0.48 to 1,174.55, Charts) index and the Nasdaq composite (up 1.07 to 2,047.15, Charts) both closed little changed.

All three indexes had spent the session on both sides of breakeven, briefly attempting a rally near midday and suffering a selloff in early afternoon.

Worries about a slowdown in corporate earnings growth has sent stocks tumbling the first three weeks of the year. After those declines, stocks managed a two-session rally Tuesday and Wednesday, as investors scooped up some beaten-down shares.

But stocks struggled Thursday as investors tried to grapple with expectations about corporate bottom lines and economic growth in the year ahead.

"The market is clearly divided right now," said Barry Hyman, equity strategist at Ehrenkrantz King Nussbaum. "Those who are looking at 2005 expectations think we can see moderate stock gains, those who are looking out at 2006 are more concerned."

He says that his sense is that the market is likely to continue to hover in a trading range, much as it did for the first 8 or 9 months of 2004, before stocks began rallying as oil prices peaked and the presidential election passed without incident.

In the very short term, stocks might still see a little bit more of a bounce, said Tom Schrader, managing director of U.S. equity trading at Legg Mason.

"It's been a rough January, and I would think we've gotten a bit oversold," he said.

Economic news -- including a read on gross domestic product growth -- and more fourth-quarter earnings are set to dominate trading Friday.

After the close, Microsoft (Research) reported fiscal second-quarter earnings and revenue that rose from a year ago and topped estimates. The tech bellwether also forecast third-quarter revenue in a range that is above analysts' estimates.

Shares of the tech bellwether added around 1 percent in extended-hours trading.

Also after the bell, Novellus Systems (Research) reported earnings of 28 cents per share, 3 cents more than expected and up from 7 cents a year ago. Shares of the chip gear maker added a little over 1 percent in extended-hours trading.

Shares of Foundry Networks (Research) fell nearly 8 percent in after-hours trade after reporting fourth-quarter revenue that missed estimates and earnings that were in line with estimates. The maker of networking gear also issued first-quarter earnings and sales guidance that is in a range that could miss estimates.

Also after the close, Dow component Procter & Gamble (down $0.12 to $55.32, Research) reported fiscal second-quarter earnings and revenue that rose from a year ago, and also boosted its outlook for the remainder of the fiscal year.

Friday brings the first read on gross domestic product growth in the fourth quarter. Economists surveyed by Briefing.com expect GDP to have grown at a 3.5 percent rate after growing at a 4.0 percent rate last quarter.

Among the stocks moving on earnings news, Caterpillar (down $4.60 to $86.52, Research) slumped 5 percent after the heavy machinery maker reported earnings that rose from a year earlier, but missed estimates. The Dow component earned $1.55 per share, up from 97 cents a year earlier. That was 8 cents short of estimates.

Fellow Dow component Verizon Communications (down $0.65 to $35.87, Research) slipped despite reporting earnings that rose from a year earlier and met estimates. The telecom earned 64 cents per share, six cents more than the prior year and in line with forecasts.

SBC Communications (down $0.91 to $23.67, Research) fell 3.7 percent on reports that it is in talks to buy AT&T (up $1.15 to $19.60, Research), its former parent. The potential deal, reported by the New York Times and the Wall Street Journal, would be worth at least $15 billion.

AT&T shares rose more than 6 percent.

Amgen (down $1.98 to $61.58, Research), the No. 1 biotech, slipped after reporting fourth-quarter earnings that were short of estimates and issuing a 2005 earnings forecast that is short of expectations.

On the upside, Nokia (up $0.89 to $15.22, Research) rose more than 6 percent after reporting a smaller-than-expected drop in fourth-quarter earnings. The Finnish mobile phone maker also forecast improved first-quarter sales.

U.S. light crude oil for March delivery gained 6 cents to settle at $48.84 a barrel on the New York Mercantile Exchange.

Prices had been higher in the morning amid bitterly cold weather in the Northeast and concerns about the Iraqi election and OPEC meeting, both Sunday.

Market breadth was mixed. On the New York Stock Exchange, advancers beat decliners 9 to 7 as 1.60 billion shares traded hands. On the Nasdaq, losers topped winners by a narrow margin on volume of 2.09 billion shares.

Investors seemed to take in stride the morning's mostly in-line economic reads.

The December read on durable goods orders showed a rise of 0.6 percent, just shy of estimates, due to a decline in demand for new aircraft. Orders climbed an upwardly revised 1.8 percent in November.

A separate report showed that the number of Americans filing new claims for unemployment increased to 325,000 last week, up by 7,000, which was less than what analysts were expecting.

Treasury prices fell, pushing the yield on the 10-year note up to 4.20 percent from 4.19 percent late Wednesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar rose versus the euro and fell versus the yen.

COMEX gold fell 60 cents to settle at $426.30 an ounce.