Dow dips, Nasdaq tries to hold on

NEW YORK (CNNMoney.com) -- Stocks struggled Wednesday afternoon as investors welcomed falling oil prices and continued to boost shares of Apple, but were cautious at the start of the quarterly earnings reporting period.

The Dow Jones industrial average (down 16.74 to 12,399.86, Charts) and the broader S&P 500 (down 2.62 to 1,409.49, Charts) index both inched lower about 2-1/2 hours into the session. The Nasdaq (up 0.76 to 2,444.59, Charts) composite added a few points.

"We've kind of got a split market today, with the Dow and commodities getting hit, and the techs holding up, largely due to Apple," said Tom Schrader, managing director of U.S. equity trading at Legg Mason.

"The talk of the week is definitely oil and other commodities," he added.

Oil prices continued to erode - and continued to have a mixed impact on stocks. Lower oil and gas prices put more money into the hands of consumers, but also can hurt oil company profits.

Oil company profits have helped lead the recent earnings growth and the stocks have also played a big role in the broad market advance over the last few years.

Alcoa (up $1.23 to $29.75, Charts) unofficially began the reporting period late Tuesday, becoming the first Dow component to release results, as is traditional. The aluminum maker reported quarterly earnings and sales that rose from a year ago and topped estimates. The company's CEO also gave a bullish outlook for 2007.

Alcoa shares jumped 4 percent Wednesday and protected the Dow 30 from bigger losses.

However, Chevron (down $1.23 to $69.40, Charts) raised some worries about the strength of earnings, announcing Tuesday night that fourth-quarter financial results will be hurt by lower commodity prices.

Oil stocks have been under pressure over the last week with the selloff in the price of the raw commodity spreading to the underlying equities.

The Amex Oil (down 15.74 to 1,100.48, Charts) index lost 1.7 percent Wednesday.

Exxon Mobil (down $1.01 to $71.08, Charts), ConocoPhilips (down $1.56 to $64.95, Charts) and Valero Energy (down $0.96 to $47.98, Charts) were among the oil stocks sliding.

U.S. light crude oil prices for February delivery fell $1.09 to $54.55 a barrel on the New York Mercantile Exchange, following a mixed weekly oil inventory report.

Stocks ended mixed Tuesday as investors mulled falling energy prices and strength in Apple (up $4.70 to $97.27, Charts) ahead of the first big wave of fourth-quarter earnings.

A few companies are due through the end of the week, but most of the S&P 500 won't report results until later in the month.

Standard & Poor's expect that fourth-quarter earnings for the S&P 500 grew 9.6 percent, a figure that is stronger than the historical average, but slower than in recent quarters. Since the first quarter of 2002, earnings have grown at least 10 percent in every quarter.

Apple (up $4.69 to $97.26, Charts) continued to rally a day after announcing a new iPhone that allows users to play music and surf the Web on their cell phone.

In other news, US Airways (up $0.98 to $58.88, Charts) said it has increased its takeover bid for bankrupt Delta Air Lines by almost 20 percent. (Full story).

Gold and other commodities continued to decline and that spread to the underlying stocks.

The Amex Gold Bugs (down $3.59 to $309.20, Charts) index lost 1.5 percent and the iShares Silver Trust (down $0.18 to $124.07, Charts) index lost 1.3 percent.

COMEX gold for February delivery slumped $4.30 to $610.70 an ounce.

Market breadth was negative. On the New York Stock Exchange, losers beat winners three to two on volume of 420 million shares. On the Nasdaq, decliners topped advancers by a narrow margin on volume of 640 million shares.

Treasury prices slumped, boosting the yield on the benchmark 10-year note to 4.69 percent from 4.65 percent late Tuesday. Bond prices and yields move in opposite directions.

10 big ideas for 2007

Danger ahead on Wall Street?

More on the markets