Market Update: Blue-Chips Gain on Positive Earnings News - TheStreet

(Updated from 4:24 p.m. EDT)

It's a familiar storyline on Wall Street: Investors buy stocks in the hopes of an earnings recovery, then sell when companies signal otherwise.

Today, they did a little of both. In reaction to mixed signals -- a profit warning from network builder

Level 3 Communications

(LVLT)

and a positive earnings affirmation from diversified manufacturer

United Technologies

-- stocks finished mixed.

The

Nasdaq Composite fell 39.8 points to 1988.6, closing below 2000 for the first time since April 17. The

Dow Jones Industrial Average -- which counts UTX as one of its 30 components -- finished up 21.74 points to 10,645.38. This morning, United Technologies reiterated that it expects to achieve 15% growth in the second quarter and the year. The

S&P 500 dropped 5.93 points to 1208.43.

Among other Dow winners,

General Motors

(GM) - Get Report

gained 3.6% to $61.51. In an interview with

Barron's

over the weekend, GM's top management said better cars and trucks and an increased focus on productivity and costs would help it gain market share.

But the theme of the day was earnings speculation. Investors are still betting corporate earnings will improve later this year. However, a spate of recent profit warnings has been chipping away at that belief. Last week's flood of bad news sent the Nasdaq down 8.4% for the week, its largest weekly percentage drop this year. The Dow slumped 3.2% and the S&P 500 finished the week down 4%.

"With no other financial or economic news this week, preannouncements will be the market's focus over the next few days," said Jay Meagrow, vice president of trading at McDonald. "They will be waiting to see what shoe drops, and from which sector."

Companies that warned last week suffered more losses today.

Nortel

(NOK) - Get Report

tumbled an additional 13.6% to $8.52,

JDS Uniphase

(JDSU)

decreased 14.8% to $10.60 and

Nokia

(NOK) - Get Report

fell another 1.38% lower to $22.15.

"We had sellers in tech and telecom stocks," said John O'Donoghue, co-head of listed trading at

Credit Suisse First Boston

.

Investors bid software giant

Oracle

(ORCL) - Get Report

slightly lower ahead of its fourth-quarter earnings report to be released this evening. Back in March, the company

warned that it would fall short of its prior earnings guidance for the fourth quarter. Oracle shed 1.1% to $14.84. The

Dow Jones Software Index

, which tracks the sector, decreased 1.9%.

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International

European markets finished lower today. London's

FTSE 100

closed down 51.4 to 5671.6, under pressure from oil, bank and tech stocks. The Paris

CAC-40

lost 83.6 points to 5160.3. Frankfurt's

Xetra Dax

shed 46.1 to 5869, after hitting a two-month low on Friday.

The euro was lately trading lower at $0.8594. The greenback was higher to 123.41 yen.

Asian markets closed lower overnight on continuing earnings jitters. Hong Kong's

Hang Seng

fell 153.7 points, or 1.17%, to 12,948.8, to a two-month low. The blue-chip proxy was led down by weakness in China telecom operators. Tokyo's

Nikkei 225

lost 92.6 points, or 0.72%, to 12,697.8, amid weakness in techs and telcos but strength in banking stocks.

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