Techs drag down Nasdaq

NEW YORK (CNNMoney.com) -- Yahoo and IBM dragged down the tech sector Wednesday afternoon, while the Dow Jones industrial average struggled near its all-time trading and closing highs.

The tech-fueled Nasdaq (Charts) composite lost 0.4 percent, with roughly 2-1/2 hours left in the session.

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The Dow Jones industrial average (up 6.58 to 12,779.62, Charts) added a few points thanks to strength in JP Morgan Chase and select other stocks.

The broader S&P 500 (down 0.71 to 1,470.77, Charts) index was barely changed after ending the previous session at a fresh 6-1/2 year high.

Stocks surged Tuesday as investors welcomed upbeat earnings from Dow components Coca-Cola (Charts) and Johnson & Johnson (Charts).

But the earnings picture was more mixed Wednesday, and so was the market. Results from IBM and Yahoo were among the disappointments, while results from Intel, JP Morgan Chase and United Technologies seemed to impress investors.

"I think we're holding up pretty well considering the mix of earnings and the tech nervousness," said Joseph Saluzzi, co-head of equity trading at Themis Trading.

Roughly one-fifth of the S&P 500 is reporting results this week, including 12 Dow components. First-quarter earnings are currently on track to have risen 3.6 percent from a year ago, according to the latest Thomson Financial figures.

After the close Tuesday, IBM reported higher quarterly earnings that met estimates and higher sales that topped forecasts. IBM also reiterated its earlier 2007 earnings forecast.

But analysts focused on the company's sluggish U.S. sales growth and both Credit Suisse First Boston and Goldman Sachs downgraded the stock Wednesday morning, Reuters reported. IBM (down $2.67 to $94.45, Charts) shares fell 2.7 percent.

Also late Tuesday, Yahoo (down $3.74 to $28.35, Charts) reported quarterly revenue and earnings that were short of forecasts, sending shares down by nearly 12 percent Wednesday.

Intel (up $0.17 to $21.15, Charts) reported higher first-quarter earnings that met estimates on lower revenue that missed forecasts late Tuesday. The company also said that gross margins, a key measure of profitability, rose in the quarter. Shares gained 1.5 percent Wednesday morning.

Wednesday morning JP Morgan Chase (up $1.95 to $52.13, Charts) reported higher quarterly earnings that topped estimates, sending shares almost 4 percent higher and helping to support the Dow.

United Technologies (up $0.56 to $66.74, Charts), another Dow stock, rose modestly after the company reported higher sales and earnings that topped estimates.

Dow component Boeing (up $2.60 to $93.05, Charts) rose on news that it is the only bidder for a $2.5 billion South Korea jet deal.

Fellow Dow component Caterpillar (up $1.39 to $69.05, Charts) gained on a Wachovia upgrade, Reuters reported. The heavy equipment maker is due to report results Friday.

Motorola (up $0.34 to $18.29, Charts) reported a first-quarter loss Wednesday morning. But the results topped estimates and shares rose.

Linear Technology (up $3.84 to $35.96, Charts) jumped 11 percent in active Nasdaq trade after the chipmaker late Tuesday reported a decline in quarterly earnings that was in line with expectations and also announced a $3 billion stock buyback plan.

In other news, Research in Motion (up $1.76 to $133.03, Charts) shares rose after the company said BlackBerry service had been restored to most users after an overnight service interruption.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 9 to 7 on volume of 880 million shares. On the Nasdaq, decliners topped advancers 4 to 3 on volume of 1.19 billion shares.

U.S. light crude oil for May delivery rose 15 cents to $63.25 a barrel on the New York Mercantile Exchange, in volatile trading after the release of the weekly oil inventory report.

COMEX gold for June delivery rose 80 cents to $693.80 an ounce.

Treasury prices climbed, lowering the yield on the benchmark 10-year note to 4.65 percent from 4.68 percent late Tuesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell versus the euro and yen and hit a 26-year low against the pound.

In other news, Merrill Lynch's April global fund manager survey showed most of those surveyed think stocks are still fairly valued even after the recent rally.

After plunging in late February on global growth concerns, stocks have bounced back in March and early April.

The money managers surveyed again said a global recession will be avoided, but showed greater worry about the prospects for earnings growth over the next 12 months.