Stocks mixed on Bernanke, Merrill

NEW YORK (CNNMoney.com) -- Stocks struggled Thursday morning as investors welcomed Fed chairman Ben Bernanke's support of a government stimulus plan, but held back amid Merrill Lynch's big quarterly loss and more troubles for the housing market.

The Dow Jones industrial average (INDU) lost a few points in the early going, while the broader S&P 500 (INX) index trended lower. The Nasdaq composite rose 0.4 percent.

Stocks tumbled Wednesday on Intel (INTC, Fortune 500)'s earnings and outlook, extending the 2008 selloff that has seen the Dow and S&P 500 both lose more than 6 percent and the Nasdaq lose nearly 10 percent.

The tone was mixed Thursday as investors welcomed Bernanke's comments, but remained concerned about the threat of recession in the wake of the housing and credit market crises.

Bernanke said that the government should act quickly to put together a fiscal stimulus plan to help consumers amid rising recession fears. He said it should be put into effect in the next 12 months and be temporary, to avoid the risk of juicing the economy too much beyond the short term and not cause a big jump in the budget deficit.

In corporate news, Merrill Lynch (MER, Fortune 500) reported a nearly $10 billion quarterly loss and said it took an $11.5 billion writedown during the quarter related to bad mortgage bets. (Full story)

On the economic front, December housing starts and building permits slumped by a bigger-than-expected margin, yielding the sharpest full-year drop in new home construction in 27 years. (Full story)

Separately, weekly jobless claims fell more than expected last week, the government said, helping to cool some worries about a big slowdown in the labor market sparked by the December monthly jobs report.

Treasury prices rose, lowering the yield on the 10-year note to 3.71 percent from 3.73 percent late Wednesday. Treasury prices and yields move in opposite directions.

In currency trading, the dollar fell versus the yen and euro.

U.S. light crude oil for February delivery rose 96 cents to $91.80 a barrel on the New York Mercantile Exchange.

COMEX gold for February delivery rose $5.50 to $887.50 an ounce.