Volatility was the word of the week for the stock market, with its 400-point dips and its 200-point gains.

So, it should have come as no surprise that the just-announced merger talks between

United Technologies

and

Honeywell

(HON) - Get Report

, which everyone was so juiced about, apparently ended before they really got good.

United Technologies said in a statement on its Web site that it ended the talks after Honeywell told the company it was considering an alternative merger proposal received this morning. News reports say possible suitors could be

General Electric

(GE) - Get Report

,

Siemens AG

(SMAWY)

and

Tyco

(TYC)

.

United Technologies was to have offered $40 billion, or a 40% premium over Honeywell's closing price yesterday. Shares of United Technologies were down 10.3% before trading was halted in that stock and Honeywell around 2:40 p.m. EDT. Honeywell was up 14.6% when it was halted. When it was resumed at 3:44 p.m. EDT, United was at 4.4%. Honeywell jumped 28.2%, after it was resumed at 4:07 p.m. EDT.

TheStreet.com

wrote about the discussions in a

story last night.

This morning, investors' reaction to the news was to take down United Technologies, which in turn tanked the

Dow Jones Industrial Average. It also had some help from

Coca-Cola

(KO) - Get Report

, which

narrowly beat earnings forecasts and said a weak euro could put pressure on future earnings. The soft-drink giant took away 14 points from the index.

Around midsession, though, other blue-chips, including Honeywell, were able to strong-arm the index into positive territory.

Earnings have been the cause of all pain and joy this week on the Street. David Bailey, equity research analyst at

Gerard Klauer Mattison

, said the week started out with people fearing the great unknown, which this week was earnings. Investors were concerned with PC demand and economic slowdown.

"When

IBM

(IBM) - Get Report

reported earnings earlier in the week, it kind of fueled those concerns. However, when

Sun Microsystems

(SUNW) - Get Report

,

EMC

(EMC)

and

Microsoft

(MSFT) - Get Report

reported very strong results, it allayed some of those concerns," Bailey said. "People's perceptions had gotten so negative, and this restored some of the confidence back in the market."

Positive earnings news pushed

Merck

(MRK) - Get Report

up 5.6%. It added almost 26 points to the Dow.

Dow-component Microsoft, still benefiting from its shining post-close earnings report Wednesday, contributed about 20 points to the Dow's upside today.

That also helped buoy the

Nasdaq Composite Index.

And one of Microsoft's partners,

Commerce One

(CMRC)

was also basking in the warm glow of investor optimism and was 9.6% higher. After Thursday's close, Commerce One posted a loss that was

less-than-expected.

The Nasdaq's most-active stock today was mobile-phone giant

Ericsson

(ERICY)

, down 16.5% after it cut its

sales and profitability forecasts, citing mobile-phone losses. The stock was downgraded by

Lehman Brothers

this morning.

Ericsson's announcement put a damper on telecoms, but

Nokia

(NOK) - Get Report

and

Broadcom

(BRCM)

were able to sustain the rally they got rolling after each reported better-than-expected earnings earlier this week.

TheStreet.com

earlier wrote separate stories on both

Broadcom and

Nokia.

Also,

SDL

(SDLI)

which announced last night it handily

beat estimates, was 17.3% higher. The news sent

JDS Uniphase

(JDSU)

, which is planning to buy SDL, up 13.8%.

Internet stocks got a boost on the heels of blowout earnings from

eBay

(EBAY) - Get Report

last night.

Goldman Sachs

raised its EPS estimates for this year and the next on eBay, and

ABN Amro

raised its EPS estimates for this year and next on SDL.

TheStreet.com

wrote a separate story on

eBay's earnings.

TheStreet.com Internet Sector

index shot up 5.9%.

Market Internals

Breadth was positive on active volume.

New York Stock Exchange: 1,590 advancers, 1,226 decliners, 1.178 billion shares. 39 new 52-week highs, 74 new lows.

Nasdaq Stock Market: 2,347 advancers, 1,597 decliners, 2.131 billion shares. 65 new highs, 101 new lows.

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Most Active Stocks

NYSE Most Actives

  • Circuit City (CC) - Get Report: 31 million shares.
  • Honeywell: 27.4 million shares.
  • AT&T (T) - Get Report: 25.4 million shares.

Nasdaq Most Actives

  • Ericsson: 86.2 million shares.
  • Microsoft: 79.4 million shares.
  • Intel (INTC) - Get Report: 58.4 million shares.

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Sector Watch

The

S&P Retail Index

was down 2.2%, after component

Circuit City

(CC) - Get Report

warned is third-quarter earnings would be below expectations. The stock was hammered, 35.6% lower. The news also brought down

Best Buy

(BBY) - Get Report

, which ended the day off 17.4%.

The

American Stock Exchange Broker/Dealer Index

rose 4.1%.

Bear Stearns

(BSC)

was up 10.4% on takeover rumors, while

Morgan Stanley Dean Witter

(MWD)

benefited from an upgrade and was up 5.7%.

Oil sectors were back in the game after November crude oil futures increased to $33.20 from $32.91last night, with the

American Stock Exchange Natural Gas Index

up 2%, and the

Philadelphia Stock Exchange Oil Service Index

up 3.3%.

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Bonds/Economy

The bond market was little changed today. With no economic releases today, there's little new to cause any change in the market's view.

The benchmark 10-year

Treasury note was lately at 100 27/32, up 3/32 to 5.636%, and it's traded in a tight range today.

The 30-year

Treasury bondis at 107 14/32, 3/32 higher, to yield 5.726%.

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International

European markets were mixed at the close, as telecoms and media stocks lost steam on Ericsson's poor earnings report.

London's

FTSE 100

was up 57.40 to 6276.30.

The

CAC 40

in Paris was up 82.96 to 6149.94, while the

Xetra Dax

in Frankfurt was 10.42 lower to 6609.01.

The beleaguered euro continued to rise after the

European Central Bank

decided to leave interest rates unchanged yesterday. The euro was lately trading at 0.8416.

The major

Asian equity markets closed out the week Friday on a positive note, surging as technology shares were buoyed by a rallying Nasdaq and healthy third-quarter earnings from Finnish telecom equipment maker Nokia.

Tokyo booked the region's smallest gains as the country's 11th-largest insurer

Kyoei Life Insurance

filed for bankruptcy. But the

Nikkei 225

still finished up 387.7, or 2.6%, at 15,198.7.

In Tokyo trading, the dollar rose 0.3 to 108.20 yen. The greenback was lately trading higher to 108.84.

Elsewhere, resurgent tech shares ruled the day, as Hong Kong's

Hang Seng

index rose 622.0, or 4.3%, to 15,044.5, South Korea's

Kospi

index jumped 30.9 higher, or 6%, to 545.9 and Taiwan's

TAIEX

index surged 323.5, or 6.4%, to 5404.8.

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