Stocks struggle on earnings, oil

NEW YORK (CNNMoney.com) -- Stocks struggled Thursday in a choppy session in which weak earnings from Bank of America and another spike in oil prices kept investors from restarting the recent rally.

The Dow Jones industrial average (Charts) lost a few points, while the S&P 500 (Charts) index ended just below unchanged. The Nasdaq composite (Charts) added 0.2 percent.

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Stocks fell Monday and Tuesday and see-sawed Wednesday as investors mulled a mix of earnings news and record-high oil prices.

Weak earnings news Thursday from Bank of America, Washington Mutual and others dragged on the market through the early afternoon. But stocks recovered a bit by the close, even as oil prices hit intraday and closing records above $89 a barrel.

Treasury prices rose, lowering the corresponding yields. The dollar slumped versus other major currencies. Gold prices rallied.

After the close of trade, Google (Charts, Fortune 500) reported higher quarterly sales and earnings that topped estimates. Shares were volatile in extended-hours trading.

Also after the close, Advanced Micro Devices (Charts, Fortune 500) reported a lower-than-expected quarterly loss.

Friday morning brings earnings from 3 Dow components: 3M (Charts, Fortune 500), Caterpillar (Charts, Fortune 500) and Honeywell (Charts, Fortune 500).

Friday is also the 20th anniversary of Black Monday, one of the biggest market crashes in history, when the Dow lost 22.6 percent in a single day.

Looking forward, stocks could be in for a bit of a retreat after the recent run.

"The earnings reporting period is not going to be great, and the market is aware of that," said Peter Cardillo, chief market economist at Avalon Partners. "At the same time you have the explosion in oil prices. Put the two together and you have the catalyst for the market to correct a bit from recent highs."

The broad market plunged more than 10 percent in August on worries that the mortgage and credit market crisis could send the economy into recession. Since that time, stocks have recovered as global banks have pumped billions into their banking systems and the U.S. Fed cut the discount rate, which impacts bank loans, and the fed funds rate, which impacts consumer loans.

Last week, the Dow and S&P 500 both hit all-time highs, while Nasdaq rose to its best level in more than 6-1/2 years.

Although a few companies released quarterly earnings last week, the number of S&P 500 companies reporting results accelerated this week.

So far 19 percent of the S&P 500 has reported quarterly results and the results have been weak as expected. Earnings are forecast to have fallen 0.2 percent versus a year ago, according to the latest figures from tracking firm Thomson Financial. Even if the rest of the results beat expectations, pushing the year-over-year growth rate into positive territory, the quarter will mark the weakest pace of earnings growth in at least 5 years.

Bank of America (Charts, Fortune 500) reported quarterly sales and earnings Thursday that fell from a year earlier and missed analysts' expectations, on a setback for the company's investment banking business in response to the summer's financial market mess. Shares slipped 2.4 percent.

Washington Mutual (Charts, Fortune 500) late Wednesday reported weaker earnings that missed estimates, due partly to problems in the housing sector. The stock fell 7.7 percent.

E-Trade Financial reported a quarterly loss versus a profit a year ago on revenue that fell from a year ago, due to the troubled mortgage market. E-Trade (Charts) shares fell 8 percent.

A variety of other big bank stocks dropped in tandem, including American Express (Charts, Fortune 500), Citigroup (Charts, Fortune 500) and JP Morgan (Charts, Fortune 500).

eBay (Charts, Fortune 500) reported a third-quarter loss due to big charges associated with its Skype telecom purchase. However, sales and earnings excluding charges rose and topped estimates. The online auctioneer also said that 2007 profits would top forecasts.

On Thursday morning, Deutsche Bank downgraded eBay to "sell" from "hold," AP reported, on worries about the company's growth prospects.

Pfizer (Charts, Fortune 500) reported quarterly sales and earnings that dropped from a year ago, but nonetheless topped analysts' forecasts.

IMS Health (Charts) shares slumped nearly 22 percent in unusually active New York Stock Exchange trade. The provider of prescription sales information reported a drop in third-quarter sales that was worse than expected, late Wednesday.

On the upside, Nokia (Charts) reported a quarterly profit that nearly doubled from a year ago, topping forecasts.

Yahoo (Charts, Fortune 500), Dell (Charts, Fortune 500) and Research in Motion (Charts) were among the large tech stocks keeping the Nasdaq afloat.

Dow gainers included GM (Charts, Fortune 500), Alcoa (Charts, Fortune 500) and Boeing (Charts, Fortune 500).

Market breadth was mixed. On the New York Stock Exchange, losers and winners were narrowly mixed on volume of almost 1.27 billion shares. On the Nasdaq, decliners topped advancers by a slim margin on volume of 2.03 billion shares.

In economic news, the number of Americans filing new claims for unemployment rose last week by a greater-than-expected amount.

The index of leading economic indicators, released after the start of trade, rose 0.3 percent in September, as expected. LEI fell a revised 0.8 percent in August.

Released at noon, the Philadelphia Fed index dipped to 6.8 from 10.9. The regional manufacturing index was expected to drop to 7.0.

U.S. light crude oil for November delivery ended at $89.47 a barrel, a record close, after hitting an intraday record of $89.55 shortly before the close. Oil prices rose on the weak dollar and escalating violence between Turkey and Iraq.

Treasury prices rallied, lowering the yield on the benchmark 10-year note to 4.49 percent from 4.55 percent late Wednesday. Bond prices and yields move in opposite directions.

In currency news, the dollar fell to another all-time low versus the euro and also dipped versus the yen.

Dollar-traded commodities including gold rallied on the weak dollar. COMEX gold for December delivery rose $6.40 to settle at $768.70 an ounce.