Nasdaq jumps, Dow drifts

NEW YORK (CNNMoney.com) -- Tech stocks rallied Wednesday as investors welcomed Intel and Yahoo's upbeat earnings, but blue chips slipped as investors dumped shares of IBM and United Technologies and eyed oil prices that briefly spiked to $89 a barrel.

The Dow Jones industrial average (Charts) lost a few points more than 3 hours into the session, with weakness in IBM and United Technologies competing with strength in Intel and JP Morgan, all of which reported earnings.

The S&P 500 (Charts) index was barely higher, while the Nasdaq composite (Charts) added 0.8 percent.

All three major gauges had been higher in the early going, but lost a little steam as the session wore on.

The day's economic news was mixed. 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.

"You have the strong earnings today and the CPI looking good," said Bill Stone, chief investment strategist at PNC Financial Services.

Those positives seemed to be overshadowing worries raised by the weak housing market, Stone said. Additionally, Wall Streeters may be looking at the continued weakness in housing as an argument for the Federal Reserve cutting interest rates again at its meeting at the end of the month, he said.

Spiking oil prices weighed on stocks over the last two sessions, Stone said, but the impact on the market so far has been contained.

U.S. light crude oil for November delivery hit an all-time trading high of $88.70 a barrel on the New York Mercantile Exchange after Turkey authorized military action in Iraq, wiping out the impact of a strong oil inventories report. (Full story)

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 7 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 4 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 the Dow's gains were limited by weakness in two companies.

IBM (Charts, Fortune 500) reported strong earnings late Tuesday, but investors sent shares lower Wednesday morning.

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.

Market breadth was positive. On the New York Stock Exchange, winners beat losers eight to seven on volume of 640 million shares. On the Nasdaq, advancers topped decliners by a slim margin on volume of 1.20 billion shares.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 4.56 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.