Stocks Slump on Rate Hike Worries, Tech Selling

NEW YORK ( TheStreet) - The Dow Jones Industrial Average finished on a flat note on Thursday, overcoming early weakness on concerns about global interest rate hikes.

The blue-chip index dipped 2 points, or 0.02%, to close at 11,823, bouncing nearly 80 points off its session-low of 11,744. The S&P 500 followed a similar pattern, losing a little more than a point, or 0.1%, to finish at 1280, which was well off the day's low of 1271. The Nasdaq Composite, however, shed 21 points, or 0.7%, to settle at 2704, falling sharply for a second-straight session.

Caterpillar ( CAT) and DuPont ( DD) were among the worst performers on the Dow. Sentiment within the index was negative with decliners outpacing advancers, 18 to 12.

General Electric ( GE), which reports its quarterly results before Friday's opening bell, Home Depot ( HD), JPMorgan Chase ( JPM) and Wal-Mart ( WMT) posted the biggest percentage gains among the blue chips.

After the closing bell, Google ( GOOG) reported a fourth-quarter profit of $2.54 billion or $7.81 per share. Excluding items, earnings came in at $8.75 per share for the December period, topping Wall Street's consensus estimate of $8.10 a share. The company also said co-founder Larry Page would assume the role of the CEO, while Eric Schmidt will become chairman. Shares were rising 2% in aftermarket trading.

Also late Thursday Dow component Hewlett-Packard ( HPQ) announced a board shake-up after the bell, appointing five new directors, including two former high-profile tech CEOs.

U.S. markets got off to a rough start Thursday after Brazil hiked interest rates 50 basis points to 11.25% after the country's inflation hit 6% in 2010. Investors then got cause to worry that China could soon follow suit on news that its economy grew a greater than expected 9.8% in the fourth quarter of 2010 .

Growth in emerging markets has fueled the commodity boom and higher interest rates could put the brakes on demand.

Gold prices came under pressure Thursday with the February gold contract dropping $23 to settle at $1,346.50 an ounce. Copper futures were off by 10 cents at $4.25 an ounce. Crude oil futures slipped below $90 for the first time in over a week, with the March contract dropping by more than 2% to $89.59.

"We've gone from the beginning stages of a recovery to the middle stages, and what typically happens is a lot of central banks start tightening because they begin to worry that their economies are heating up too fast," says Brian Gendreau, a market strategist with El Segundo, Calif.-based broker-dealer firm Financial Network, adding that the United States hasn't reached that stage yet.

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