The Nasdaq edged higher on Tuesday on strong earnings news while the Dow stumbled after a negative report from conglomerate Honeywell (HON).
The Dow Jones industrial average lost 71.85 points, or 0.68%, to 10,528.66. The broader Standard & Poor's 500 index eased 1.06 points, or 0.09%, to 1,138.77. The tech-heavy Nasdaq composite index, meanwhile, added 7.51 points, or 0.35%, to 2,147.97.
After the close of trading Tuesday, chip maker Advanced Micro Devices (AMD) posted 12 cents earnings per share in the fourth quarter on revenue of $1.2 billion. The results include an unexpected one-time gain of 3 cents a share. Analysts expected AMD to earn an average of 4 cents earnings per share.
On Wednesday, investors will get a raft of earnings reports. Among the companies due to report are telecom gear outfit Lucent (LU), wireless equipment firm QUALCOMM (QCOM), business software company Siebel Systems (SEBL) and banking giant J.P. Morgan Chase (JPM ).
By contrast, economic news will be rather light on Wednesday with a report on new home construction heading the bill. December housing starts are expected to slow to a 1.9 million annualized pace from 2.07 million in the previous month, according to economic research firm Informa/MMS. The market, however, could move depending on what President Bush says in his State of the Union Address Tuesday evening.
Talks between Honeywell and auto-parts maker Federal-Mogul apparently fell apart after the two failed to reach an agreement for the sale of Honeywell's Bendix friction materials business. Honeywell had been seeking a shield from Bendix-related personal injury asbestos liabilities.
Among the news lifting the Nasdaq, online brokerage AmeriTrade (AMTD) reported fiscal first-quarter profit more than tripled as average investors traded more in the quarter.
Despite the market's direction, earnings news was largely positive with financial behemoth Citigroup (C), a member of the Dow industrials, reporting that its fourth-quarter profit nearly doubled.
Also in bank news, Bank One (ONE), which agreed last week to be bought for $58 billion by JP Morgan Chase (JPM), posted 16% higher fourth-quarter profit thanks to higher credit-card fees and other growth in consumer banking.
The nation's fourth largest bank, Wells Fargo (WFC), reported 10% higher fourth-quarter profit thanks to rising consumer loan demand and a portfolio restructuring.
In drug sector news, pharmaceutical Johnson & Johnson (JNJ) posted sharply higher fourth-quarter profit because of strong sales of its prescription drugs and medical devices.
The world's largest carmaker, Dow component General Motors (GM), said its quarterly earnings were flat as a one-time gain from selling its Hughes Electronics unit offset losses from restructuring charges and slower car sales. But GM said it sees first quarter earnings to exceed analyst estimates.
Diversified manufacturer 3M (MMM), another Dow member, reported higher fourth-quarter earnings thanks to increased productivity and sales.
Flower delivery outfit 1-800-FLOWERS.COM (FLWS) posted 36% higher profit, boosted by stronger Web sales.
Continental Airlines (CAL) posted a $47 million profit in the fourth thanks in part to the sale of its interests in two travel Web sites.
Treasuries were mostly higher on the sell-off in equities. Treasuries had been sitting in the middle of the trading range amid light, thin volume, Informa/MMS says. Pit traders say that prices had consolidated, but the market lacked direction into the close.
Informa/MMS says global funds continue to show preference for stocks over bonds in the January survey by Merrill Lynch. A net 58% of global fund managers polled had more equities, vs. their benchmark -- a record high for the third straight month.
The NAHB housing market index cooled to 68 in January, a bit lower than expected and down from 70 in December, says Informa/MMS. That's the lowest reading since September (hardly a disaster, given the strength of home sales and construction since then). The prospective buyers' traffic index dipped to 50 from 52, but that is up from the recent low of 47 posted in November. The future sales index dropped to 75 from 77. The future sales index is the only major component to come in lower than any reading in the prior six months. Overall, the performance isn't so bad, but the dip in the future sales index is worrying.
European stock markets closed lower. London's Financial Times-Stock Exchange 100 index eased 18.80 points, or 0.42%, to 4,499.30 as U.K. consumer prices rose more than expected 0.4% in December. Pearson, the media group, was lower after Goldman Sachs downgraded stock to 'underperform' from 'in line.'
In Paris, the CAC 40 fell 29.78 points, or 0.81%, to 3,660.19 despite reports that French employers are confident of an economic recovery, and as the current account surplus increased.
Germany's DAX index lost 33.51 points, or 0.81%, to 4,106.41 following reports January ZEW Survey fell to 72.9 from 73.4 in December but the current conditions indicator for Germany rose 8.8 points to 74.9. The economic expectations indicator rose to 80.1.
Asian markets finished higher on Tuesday. In Japan, the Nikkei 225 index gained 66.77 points, or 0.61%, to close at 11,103.10 as Sony and Canon paced gainers after the Yen weakened against the dollar.
In Hong Kong, the Hang Seng index added 317.12 points, or 2.39%, to close at 13,570.43.