Blue chips drag, techs drift

NEW YORK (CNNMoney.com) -- Stocks were mixed late Wednesday, at the end of a choppy session in which investors weighed upbeat earnings reports from Intel and others, mixed readings on the economy and oil prices up near $89 a barrel.

The Dow Jones industrial average (Charts) lost 0.4 percent, after having slumped more than 100 points in the early afternoon.

The S&P 500 (Charts) index lost a few points, while the Nasdaq composite (Charts) gained 0.5 percent.

Record high oil prices had weighed on stocks for the last two sessions, but investors seemed to be focused for most of Wednesday on upbeat earnings.

Stocks had risen through the early afternoon, thanks to Yahoo, Intel, JP Morgan and others. The optimism about the earnings also took the focus away from the morning's mixed economic news, including a rise in consumer prices.

But news news that Turkey has approved military action in Iraq sent U.S. light crude oil for November delivery to an all-time trading high of $89 a barrel - and caused stocks to slide in the afternoon.

But some of the selling pressure eased up near the close as oil prices gave up gains and the Nasdaq moved higher again.

The combination of the record high oil prices and the morning's consumer price report may have revived worries about inflation, said Ron Kiddoo, chief investment officer at Cozad Asset Management.

"We had some good earnings, but I think we're still seeing the override of the oil prices," Kiddoo said. "The inflation numbers weren't bad but they weren't great, so people may be worrying that higher inflation could mean the Federal Reserve won't be able to cut rates again when it meets at the end of the month."

Additionally, the sustained rise in oil prices is as much a reflection of global demand as concerns about geo-political instability, said Bill Stone, chief investment strategist at PNC Financial Advisors. So to the extent that higher oil prices equals stronger global growth, that also suggests no Fed cut in two weeks.

Federal Reserve Chairman Ben Bernanke's speech at the New York Economic Club Monday added to bets that the Fed may cut not short-term interest rates again, as some have hoped. The central bank cut the fed funds rate in September for the first time in four years, so as to counteract the bloodletting from the credit market crisis.

The Federal Reserve's "Beige Book" periodic survey of the economy, released at around 2:00 p.m. ET, showed that economic growth continued to expand in September and early October, but at a slower pace than in August.

An earlier report showed that housing starts and building permits slipped in September, falling more than economists had been expecting.

A separate report showed that consumer prices rose more than expected in September, although "core" prices, which strip out volatile food and energy costs, rose in line with forecasts.

After the close Tuesday, Yahoo (Charts, Fortune 500) reported higher quarterly sales and profits that topped estimates. The Internet search behemoth also issued a fourth-quarter revenue outlook that was roughly in line with forecasts. Yahoo shares jumped 5 percent Wednesday.

Also late Tuesday, Intel (Charts, Fortune 500) reported a jump in sales and profit that was better than expected, thanks to a strong market for PCs. Shares of the Dow component added 3.6 percent Wednesday.

Dow components JP Morgan Chase (Charts, Fortune 500) and Coca-Cola (Charts, Fortune 500) also reported upbeat earnings Wednesday, sending shares higher.

But investors were less impressed with other Dow components reporting results.

IBM (Charts, Fortune 500) reported strong earnings late Tuesday, but investors sent shares lower Wednesday anyway on a 'sell the news' response.

United Technologies (Charts, Fortune 500) reported higher earnings that beat estimates Wednesday morning, but the stock fell on questions about the company's mixed 2008 forecast.

Home Depot (Charts, Fortune 500) and General Motors (Charts, Fortune 500) were among the other big blue chips falling after rallying over the last week.

The Dow and S&P 500 both hit record highs last week.

Market breadth was negative. On the New York Stock Exchange, losers beat winners nine to seven on volume of 1.18 billion shares. On the Nasdaq, decliners beat advancers by four to three on volume of 2.09 billion shares.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 4.55 percent from 4.64 percent late Tuesday. Bond prices and yields move in opposite directions.

COMEX gold for December delivery rose 50 cents to $762.50 an ounce.