Dow hits new trading high

NEW YORK (CNNMoney.com) -- Blue chip stocks clung to gains Thursday morning, with the Dow hitting a fresh record trading high, but the tech sector struggled, giving up early gains sparked by news of a management change up at Dell.

A mild read on a key inflation indicator was countered by a report showing contraction in the manufacturing sector.

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The Dow Jones Industrial average (up 19.79 to 12,641.48, Charts) added a few points 2-1/2 hours into the session, briefly touching a fresh all-time trading high. The broader S&P 500 (up 4.05 to 1,442.29, Charts) index added a few points and flirted with a fresh more than six-year high.

The tech-heavy Nasdaq composite (up 2.19 to 2,466.12, Charts) hovered near unchanged after rising in the morning.

Dell (up $0.28 to $24.50, Charts) helped pace an early tech advance. The PC maker said late Wednesday that chairman and founder Michael Dell would retake the helm of the company, replacing its CEO, who abruptly resigned and is quitting the board.

The company also warned that fiscal fourth-quarter sales and earnings would miss estimates. However, investors focused on the management changes, and Dell shares initially surged Thursday morning, lifting the broader technology sector.

However, Dell stock gave back most of its gains as the morning wore on, and that caused other tech stocks to give back bigger gains too.

Meanwhile, Google (down $8.10 to $493.40, Charts) shares continued to slide as investors took a "sell the news" approach in response to its earnings released late Wednesday. The Internet search leader reported higher quarterly and full-year financial results that topped analysts' estimates. (Full story)

Stocks rallied Wednesday after the Federal Reserve opted to hold a key short-term interest rate steady at 5.25 percent, as expected, and implied in its statement that the economy is holding firm, while core inflation is moderating.

That outlook seemed to be echoed by economic news released early Thursday morning, including reports that personal income and spending rose in December, in line with estimates. At the same time, the report's inflation component, the core PCE deflator, rose just 0.1 percent. (Full story)

A separate report showed a bigger-than-expected decline in the number of Americans filing new claims for unemployment.

The early morning reports seem to be in line with the Fed's bet that the economy is slowing enough to take the edge off inflation, but not enough to send the economy into a recession, said Richard Hoyt, portfolio manager at KDV Wealth Management.

But on the downside, the January ISM index, released later in the morning, showed a bigger-than-expected decline, falling to 49.3. A level below 50 is seen as meaning contraction in the sector.

The report was in tune with a weaker Chicago PMI - a regional manufacturing report released earlier in the week. The two reports raised concerns that the overall sector may be seeing a slowdown.

"There may be some concern with that sector, but the big picture on the economy and on the demand side of the supply and demand equation still looks good," Hoyt said, noting the strong fourth-quarter GDP report released Thursday, and upbeat readings on consumer spending and durable goods orders released earlier in the week.

Among other tech movers, On Semiconductor (up $0.97 to $9.33, Charts) rallied 11 percent after reporting higher fourth-quarter earnings that topped estimates.

However, a number of big tech stocks slid, including Hewlett-Packard (down $0.88 to $42.40, Charts) and Microsoft (down $0.32 to $30.54, Charts).

Exxon Mobil (up $0.64 to $74.74, Charts) reported the highest annual profit in U.S. history Thursday morning, although fourth-quarter net income slipped from a year earlier. (Full story)

Marathon Oil (up $0.75 to $91.09, Charts) reported lower fourth-quarter earnings Thursday, due to weaker refining margins and lower natural gas prices.

Overall energy earnings are expected to decline in the fourth quarter for the first time since 2002, according to Thomson Financial.

Market breadth was positive. On the New York Stock Exchange, winners topped losers two to one on volume of 715 million shares. On the Nasdaq, advancers narrowly edged decliners on volume of almost 1 billion shares.

Treasury prices inched lower, raising the yield on the benchmark 10-year note to 4.82 percent from 4.80 percent late Wednesday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar slipped versus the euro and was little changed against the yen.

U.S. light crude oil for March delivery fell 29 cents to $57.85 a barrel on the New York Mercantile Exchange.

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