Dow breaks 12,800, new all-time high

NEW YORK (CNNMoney.com) -- The Dow Jones industrial average hit a new high Wednesday afternoon on the strength of solid earnings from JP Morgan and Intel, while Yahoo and IBM dragged down the tech sector.

The Dow Jones industrial average (up 37.38 to 12,810.42, Charts) added about 0.3 percent with little over an hour left in the session, topping 12,800 for the first time.

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The Dow's previous trading high was 12,795.93 and its record closing high was 12,786.64, both from Feb. 20. In reaching 12,800, the Dow posted a relatively quick recovery after the Feb. 27 sell-off, when it tumbled 416 points.

The broader S&P 500 (up 2.85 to 1,474.33, Charts) index edged up slightly after ending the previous session at a fresh 6-1/2 year high. The tech-fueled Nasdaq (Charts) composite lost 0.2 percent.

Stocks surged Tuesday as investors welcomed upbeat earnings from Dow components Coca-Cola (Charts, Fortune 500) and Johnson & Johnson (Charts, Fortune 500).

The earnings picture was by and large strong Wednesday, with a few disappointments. Results from Intel, JP Morgan Chase and United Technologies impressed investors, while IBM and Yahoo (Charts, Fortune 500) earnings came in below expectations.

"The market is driven by the fact that first-quarter earnings are higher than what the Street was looking for," said Ron Kiddoo, chief investment officer at Cozad Asset Management. "People were expecting 4 percent gains, but we were talking about 10 percent, and it looks like we're closer to the right number."

"And there's no bad world news right now - it's just status quo. We could get dampened by bad world news or a really bad earnings announcement, but that hasn't happened yet," he added.

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 rising more than 10 percent each quarter for more than three years.

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 $2.18 to $94.94, Charts, Fortune 500) shares fell 2.5 percent.

Also late Tuesday, Yahoo (down $3.71 to $28.38, Charts, Fortune 500) reported quarterly revenue and earnings that were short of forecasts, sending shares down by nearly 12 percent Wednesday.

Intel (up $0.32 to $21.30, Charts, Fortune 500) 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 1.3 percent Wednesday morning.

Wednesday morning JP Morgan Chase (up $1.99 to $52.17, Charts, Fortune 500) reported higher quarterly earnings that topped estimates, sending shares 4 percent higher and supporting the Dow.

United Technologies (up $0.75 to $66.93, Charts, Fortune 500), another Dow stock, rose modestly after the company reported higher sales and earnings that topped estimates.

Dow component Boeing (up $3.28 to $93.73, Charts, Fortune 500) rose on news that it is the only bidder for a $2.5 billion South Korea jet deal.

Fellow Dow component Caterpillar (up $1.96 to $69.62, Charts, Fortune 500) gained on a Wachovia upgrade, Reuters reported. The heavy equipment maker is due to report results Friday.

Motorola (up $0.33 to $18.28, Charts, Fortune 500) reported a first-quarter loss Wednesday morning. But the results topped estimates and shares rose.

Linear Technology (up $4.18 to $36.30, 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 $3.09 to $134.36, 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 8 to 7 on volume of 1.29 billion shares. On the Nasdaq, decliners topped advancers 3 to 2 on volume of 1.74 billion shares.

U.S. light crude oil for May delivery fell 10 cents to $63 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 4.66 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.