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Updated from 4:04 p.m. EST

Stocks ended mixed Tuesday with the


closing at a new 30-month high, as investors looked past positive fourth-quarter earnings to guidance for the first quarter, which has yet to wow the Street.



fell 71.85 points, or 0.7%, to 10,528.66; the

S&P 500

declined 1.06 points, or 0.1%, to 1138.77; but the Nasdaq gained 7.51 points, or 0.4%, to 2147.97, topping Friday's high.

Volume was heavy; 1.7 billion shares traded on the New York Stock Exchange, while 2.5 billion shares changed hands on the Nasdaq. Advancers beat decliners by about 3 to 2 on both markets.

What Have You Done for Me Lately?

Stocks struggled to make gains Tuesday, despite positive earnings reports from several major companies. Many market experts believe that the equity market has already priced in a robust fourth quarter and has shifted its sights to first-quarter guidance, hoping that strong growth will continue to fuel corporate profit.

"Most of the focus is on earnings, but investors are putting a lot of emphasis on projections and estimates going forward," said Robert Pavlik, portfolio manager at OakTree Asset Management. "Most believe last quarter's earnings results will meet or beat expectations, so investors want signs of continued growth."

In several instances, fourth-quarter earnings have met or beaten expectations, but stocks have tumbled as guidance fell short of expectations.

Last week, shares of



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struggled after the company said it earned 27 cents a share in the fourth quarter, 2 cents ahead of analysts' expectations. However, Intel also said it sees revenue in the first quarter of between $7.9 billion and $8.5 billion, placing the midpoint of this range below the consensus estimate of $8.24 billion.

Pavlik also pointed out that both

United Technologies





offered first-quarter guidance that was at the low end of analysts' expectations. Declines in these two stocks accounted for nearly 60 Dow points.

Pavlik is waiting for the pick-up in corporate earnings to trigger improvements in the lagging sectors of the economy.

"The real focus is on the numbers going forward. We have not seen a real follow-through in employment and the retail numbers were only ho-hum," added Pavlik. "The market wants to see a pickup in utilization and production; most reports have been positive, but some of these releases have been of secondary importance."

Thomas McManus, chief investment strategist at Bank of America, is also cautious. He cut his recommended stock allocation to 65% from 70%, based on valuation concerns.

"Of course, we know that the market doesn't go down because valuations are too high; it goes down (usually) because earnings estimates are too high and cannot be sustained," said McManus.

Strong future guidance could go a long way toward justifying valuations, which many market experts believe are stretched.

Other Markets

Markets overseas finished mixed. Germany's Xetra DAX closed down 0.8% to 4106, while London's FTSE fell 0.4% to 4499. In Asia, Japan's Nikkei closed 0.6% higher at 11,103.1, while Hong Kong's Hang Seng was up 2.4% at 13,570.4.

The 10-year Treasury note fell 5/32, yielding 4.05%, while the dollar was weaker vs. the euro, following another statement from the European Central Bank on Monday. The ECB said it was concerned about excessive exchange-rate moves and wanted stability in the common European currency. The euro recently touched $1.2579. The dollar was also weaker against the Japanese yen.


In earnings news,



beat analysts' fourth-quarter consensus by a penny with earnings of 91 cents a share. Revenue was up about 13%. Citi shares lost 17 cents, or 0.3%, to $49.33.

Continental Airlines


reported a fourth-quarter loss of 58 cents a share, excluding items, which was significantly better than the consensus of a loss of 81 cents a share. Revenue rose 10% in the quarter. The company's shares slipped 59 cents, or 3.4%, to $16.86.

Another airline,



, surpassed analysts' fourth-quarter estimates, earning 51 cents a share compared with the 49 cents-a-share consensus. Revenue jumped 20%. The stock soared 86 cents, or 6.2%, to $14.75.

Tech company



said it earned 32 cents a share, a penny ahead of Wall Street's consensus, on top of a 5.5% increase in sales. The shares dipped 94 cents, or 6%, to $14.75.

Dow component 3M said earnings improved to 77 cents per share from 65 cents last year, a penny ahead of Wall Street expectations. The shares fell $5, or 5.9%, to $80.48.

United Technologies posted a profit of $1.16 a share after earning $1.06 last year, beating the consensus estimate by 3 cents a share. Despite the announcement, the shares dipped $2.50, or 2.6%, to $95.00.

Johnson & Johnson


earned 57 cents per share after posting a profit of 48 cents in the same quarter last year; the company beat the consensus by a penny. J&J stock rallied $1.05, or 2.1%, to $51.50.

Bank One


said it earned 82 cents per share, beating Street expectations by 2 cents. The company, which just last week announced plans to be acquired by

J.P. Morgan


, earned 72 cents a year ago. Bank One shares fell 15 cents, or 0.3%, to $50.85.

Also in the financial sector,

U.S. Bancorp


earned 50 cents per share, missing the consensus by just a penny after earning 48 cents last year. The shares stumbled 30 cents, or 1.1%, to $28.20.

Shares of

JDS Uniphase


surged 56 cents, or 10.8%, to $5.73, becoming the latest telecom-equipment stock to benefit from the sector's newfound luster. Rumors were also circling that the company is going to be acquired by




Shares of



tumbled $1.74, or 4.7%, to $35.69, after a deal fell through that would have protected the company from asbestos lawsuits.

In research,

AT&T Wireless


was downgraded at CIBC World Markets. The cell-phone company also reportedly received a bid from

Cingular Wireless

to acquire the company in a cash deal that would make it the nation's No. 1 wireless carrier,

USA Today

reported. Shares of AT&T Wireless rose 40 cents, or 4, to $10.39.

And Wachovia upgraded shares of




Nortel Networks


. Shares of Nortel gained 8 cents, or 1.2%, to $6.97 while shares of Lucent improved 13 cents, or 2.8%, at $4.74.

Looking ahead, investors will remain firmly focused on earnings tomorrow. Wednesday's calendar features a plethora of major earnings reports. Highlights include: J.P. Morgan Chase,

Merrill Lynch


, Lucent, and



, all of which report before the open. After the bell, look for







Computer Associates



On the economic calendar, housing starts will be released at 8:30 a.m. and are expected to decline slightly to 1.95 million units in December from 2.07 million in the prior month. In addition, building permits are expected to rise slightly to 1.875 million from 1.863 million. Housing and construction have been one of the key drivers of the current economic upswing.