Stocks Stagger Back to Midline

Updated from 4:15 p.m. EDT

Stocks in the U.S. spent Thursday bobbing in and out of the red as investors dealt with a mixed bag of earnings news and drab economic data but finished the day little changed from the morning.

Among the major market averages, the blue-chip Dow and S&P had a slightly better day than the more tech-heavy Nasdaq. The Dow Jones Industrial Average managed to claw higher by 1.22 points, or 0.01%, to end the day at 12,620.49, propped up its best-performing components, IBM (IBM Quote) and Citigroup (C Quote). Similarly, the S&P 500 rose 0.85 points, or 0.06%, to 1365.56.

The Nasdaq Composite, however, never entered positive territory and finished down 8.28 points, or 0.35%, to 2341.83.

Matt King, chief investment officer with Bell Investment Advisors, commented that today's news has served to remind investors that the earnings season remains a mixed one -- that "the bad times are not quite over yet" -- notwithstanding yesterday's barrage of positive numbers, which had sent equity measures soaring.

Doug Roberts, chief investment strategist with ChannelCapitalResearch.com, pointed out that the market has nonetheless shifted its stance to "two steps forward and one step back," rather than the other way around, in large part thanks to the lingering cushion that the Federal Reserve has provided in actively addressing the liquidity problems and credit issues that have dragged on the market for the past few months.

Still, he noted, "The market has settled on a trading range, and it doesn't want to stick its neck out too far." He added that he believes it's unlikely stocks will break out of that range any time soon.

Breadth was poor for the day. Winners and losers were split about evenly on the New York Stock Exchange, but decliners had a slight edge, and the Nasdaq saw losers beating gainers 3 to 2. Volume reached about 1.84 billion shares on both exchanges.

Helping to pressure stocks was drugmaker Pfizer (PFE Quote), which said first-quarter earnings slid 18% from last year to $2.78 billion, or 48 cents a share. Adjusted income missed analyst expectations by a nickel a share. Shares of the Dow component surrendered 3.3%.

Fellow industrial United Technologies (UTX Quote), a purveyor of building and aerospace systems, topped projections but left its outlook unchanged at a subpar range, and shares were down 2.5%.

IBM, however, lent support to the Dow after trouncing analyst estimates with surging continuing-operations earnings of $2.32 billion, or $1.65 a share. Shares climbed 2.2%.

Staying in the tech sector, eBay (EBAY Quote) eased 3.5% after user growth came in weaker than expected in the first quarter. That's despite earnings and revenue rising more than 20% from a year earlier to beat consensus.

Elsewhere, Merrill Lynch (MER Quote) widely missed Wall Street's sharply lowered expectations as enormous writedowns forced a continuing-operations loss of $1.97 billion, or $2.20 a share. Further, the struggling investment bank said it plans to lay off around 4,000 employees, or 10% of its workforce, from year-end levels. Shares took an initial fall, but added 4.1% to close at $46.71.

Away from earnings, word surfaced last night that JPMorgan Chase (JPM Quote) launched a preferred-share offering worth $6 billion. The stock was up slightly at $45.12 following a day of mixed trading.

Separately, Citigroup stock lifted by 2.5% after the bank agreed to sell most of CitiCapital, its North American commercial lending-and-leasing business, for an unspecified price to General Electric's (GE Quote) commercial-finance unit. Citi also is due to report Friday morning. GE was down 0.7% at $32.02.

As for economic data, the Philadelphia Fed Index registered at negative 24.9 for April, indicating a severe contraction in northeast factory activity. That's down sharply from March's reading of minus 17.4, and far worse than the slight improvement that economists had called for. It also represents the lowest level since February 2001, when the U.S. was on the brink of its last recession.

Meanwhile, the Labor Department said the number of people filing for unemployment benefits climbed by 17,000 people from last week's revised numbers to 372,000 -- less grim than expected, but still higher than at the start of the last recession seven years ago.

"We can think of no good reason why claims should now level off, and plenty of reasons why they should be expected to rise further," said Ian Shepherdson, chief U.S. economist with High Frequency Economics. "Expect 400,000-plus by midyear."