Stocks cut losses on IBM

NEW YORK (CNNMoney.com) -- Stocks erased losses Tuesday morning, with the Dow turning higher, after IBM boosted its full-year outlook and said it would buyback $15 million in stock.

The Dow Jones industrial average (INDU) and the broader Standard & Poor's 500 (SPX) index inched higher nearly two hours into the session. The Nasdaq composite (COMP) lost a few points.

Shares had slipped in the morning after reports showed spiking wholesale inflation, weakening consumer confidence and more problems for the housing market.

But the Dow turned higher and the Nasdaq erased losses after IBM's announcement. IBM (IBM, Fortune 500) shares rose 2.5%.

Economic news. The Producer Price Index (PPI), a measure of inflation at the wholesale level, rose 1% in January after rising a revised 0.4% in the previous month. Economists surveyed by Briefing.com had expected PPI to rise 0.4%.

The so-called "core" PPI, which strips out volatile food and energy prices, rose 0.4% after rising 0.2% in the previous month. Economists had expected a 0.2% gain.

The inflation data weighed on investors a day after stocks had rallied on a positive decision ratings agency S&P made on bond insurers' credit ratings.

In other economic news, consumer confidence dropped to a more than 14-year low in February, falling to a reading of 75 from a revised 87.3 in January. Economists thought it would fall to 82.0.

Another report showed that home prices in 20 key markets slumped 9.1% in 2007. The S&P Case/Shiller Home Price index showed the biggest annual drop in its 20-year history.

Corporate news. MBIA (MBI) remained in focus after the bond insurer said late Monday that it will stop paying quarterly dividends.

Home Depot (HD, Fortune 500) reported weaker quarterly earnings that missed forecasts and warned that 2008 will continue to be challenging. Regardless, shares inched higher.

Target (TGT, Fortune 500) reported earnings that fell from a year and topped estimates on revenue that rose from a year ago and missed estimates. Shares gained.

Macy's (M, Fortune 500) rose after reporting higher quarterly earnings that topped estimates.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by 3 to 2 on volume of 440 million shares. On the Nasdaq, advancers beat decliners 3 to 2 on volume of 740 million shares.

Other markets. U.S. light crude oil for April delivery fell 23 cents to $99 a barrel on the New York Mercantile Exchange.

COMEX gold for April delivery rose $1.30 to $941.80 an ounce.

Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.87% from 3.89% late Monday. Bond prices and yields move in opposite directions.

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