Dow gains, Nasdaq wanes

NEW YORK (CNNMoney.com) -- Stocks were mixed late Thursday morning as investors considered a weak reading on consumer sentiment and an encouraging reading on core inflation following the previous session's big rally.

The Dow Jones industrial average (up 19.51 to 12,572.47, Charts) added 0.2 percent around two hours into the session. The broader S&P 500 (up 1.20 to 1,449.00, Charts) index was little changed and the Nasdaq (Charts) composite lost a few points.

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Stocks jumped Thursday, despite a rise in oil prices and some weak economic news. Friday's trade was more choppy.

Stocks were mixed early after a mild reading on inflation, but turned negative after the release of the University of Michigan's consumer sentiment index, which fell to 85.3 in April, a bigger than expected drop.

However, after the initial shock of the report wore off, stocks returned to mixed territory as investors considered a variety of factors.

"There was a little relief this morning that inflation hadn't spread beyond food and energy, but then you have the sentiment index," said John Wilson, chief market technician at Morgan Keegan.

The Producer Price Index (PPI) rose 1 percent in March, topping expectations. However, the so-called "core" PPI, which strips out volatile food and energy prices, was unchanged, versus forecasts for a rise of 0.2 percent.

A separate report showed the February trade gap unexpectedly narrowed. Yet another report showed consumer sentiment came in weaker-than-expected in April.

In addition, investors eyed a seesawing oil market, a runup in Treasury prices, earnings news from GE and a forecast from Merck.

The period of reporting quarterly earnings results starts to pick up next week and the market is probably a little nervous ahead of it, Wilson said.

"Earnings typically beat the estimates and I don't think it will be any different this time," said Wilson. "But this is also the first quarter that's not setting up for double-digit (percentage gains in) earnings in 14 quarters."

After growing more than 10 percent for 14 quarters, earnings are expected to grow by less than 5 percent in the first quarter, according to Thomson Financial estimates.

In corporate news, General Electric (Charts) reported higher quarterly earnings and revenue that met analysts' forecasts. The company also gave earnings guidance for the second quarter and the full year that was in line with forecasts.

Merck (up $3.63 to $49.99, Charts) shares surged nearly 8 percent after the company said late Thursday that first-quarter earnings would top estimates, overshadowing news that a government advisory panel said Merck's proposed painkiller Arcoxia should not be approved.

On Friday, a federal judge in New Jersey threw out a class-action lawsuit regarding its withdrawn painkiller Vioxx.

Dyax (up $2.19 to $6.19, Charts), a biotech research firm, jumped 54 percent in unusually active Nasdaq trading on positive trial results for its skin disease treatment.

SLM (up $4.90 to $45.65, Charts) surged almost 12 percent on news that its in talks with buyout firms and could be sold for over $20 billion, according to a New York Times report. SLM, also known as Sallie Mae, is the largest U.S. student loan provider.

In other news, Apple (down $1.29 to $90.90, Charts) said late Thursday that it is delaying the release of its new operating system, Leopard, to October from June, because it had to divert its engineering resources to the new iPhone. The iPhone is still on track for a June release, the company said.

Market breadth was negative. On the New York Stock Exchange, losers beat winners by a slim margin on volume of 510 million shares. On the Nasdaq, decliners narrowly topped advancers on volume of 670 million shares.

U.S. light crude oil for May delivery rose 35 cents to $64.20 a barrel on the New York Mercantile Exchange.

Treasury prices fell, raising the yield on the benchmark 10-year note to 4.76 percent from 4.73 percent late Thursday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar was little changed versus the yen and modestly lower versus the euro.

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