Tech stocks lost some of their earlier steam, but remained higher to finish in the green, following a morning rally on favorable earnings reports and fresh economic data indicating the Federal Reserve may further cut interest rates.
Blue chips, meanwhile, closed down with weakness from diversified industrial conglomerate Minnesota Mining & Manufacturing Co. (MMM) after an analyst's investment rating downgrade.
Late Tuesday, 3M said it expects fourth quarter earnings to miss analysts' expectations because of the slowing economy and a strong U.S. dollar. Shares of 3M closed down 3-1/2 at 110-1/4.
Techs got a boost from chip maker Intel Corp. (INTC), which said it's planning to boost capital spending 12%, despite its warning that first quarter revenues may fall 15%.
Given the aggressive research and development spending plans at Intel, investors are betting the bad news is old news and priced into the stock, said Al Goldman, chief market strategist at A.G. Edwards & Sons, Inc.
After the session close on Tuesday, Intel posted fourth-quarter results that beat previously reduced Wall Street estimates.
"Investors are starting to look beyond the valley of an economic slowdown and deceleration in earnings growth," Goldman said. He added the slowdown should last for another quarter or two, with better times to follow.
Tech shares also were lit up by Internet router maker Juniper Networks Inc. (JNPR), which beat Wall Street's estimates along with circuit manufacturer Applied Micro Circuits Corp. (AMCC).
In economic news, the government reported the December Consumer Price Index, a key gauge of inflation at the consumer level, rose 0.2%. The core level, which excludes volatile food and energy prices, was up 0.1%, which was on the tame side of Wall Street's expectations. In a separate report, U.S. industrial production fell 0.6% in December, and November was revised a little lower to a 0.3% decline.
The monthly declines join mounting evidence the economy is slowing, especially in the manufacturing sector. And given the evidence of a cooling economy, investors are hoping for more interest rate cuts by the Fed to lift the economy and sagging corporate profits.
Meanwhile, oil futures were off as OPEC delegates formally approved cuts in crude oil production.
The tech-heavy Nasdaq Composite Index finished up 64.28 points, or 2.45%, at 2,682.83. The Dow closed down 68.32 points, or 0.64%, at 10,584.34. The broader Standard & Poor's 500 Index ended up 2.90 points, or 0.22%, at 1,329.55.
Looking ahead to Thursday, the markets likely will scrutinize International Business Machines Corp. (IBM), which reported fourth-quarter profits rose 28%, slightly exceeding analysts' expectations. The news came after the session's close Wednesday.
And on Thursday, results are expected from Microsoft Corp. (MSFT), Nortel Networks Corp. (NT) and Sun Microsystems Inc. (SUNW).
Treasuries ended higher following new economic data pointing to a slowing economy and the likelihood the Fed may further slash interest rates when it convenes Jan. 31.
Stocks in the News
Aircraft maker Boeing Co. (BA) said profits climbed 36% in the fourth quarter, beating Wall Street's estimates, as it pumped more cash out of its sprawling aerospace businesses: Reuters
Photography giant Eastman Kodak Co. (EK) reported lower fourth-quarter earnings amid a slowdown in the photography market. The company also said first-quarter results would meet previous estimates: Reuters
European markets finished higher. The London Financial Times-Stock Exchange 100 index climbed 114.10 points, or 1.88%, at 6,197.40. In Germany, the DAX Index gained 150.49 points, or 2.31%, at 6,653.38. Meanwhile, France's CAC 40 was up 122.42 points, or 2.12%, at 5,884.09.
The Asian markets finished mixed. Japan's Nikkei ended up 83.18 points, up 0.61%, at 13,667.63. Hong Kong's Hang Seng Index finished down 101.67 points, or 0.66%, at 15,261.48.
Electricity was shut off to parts of California as electricity demand overwhelmed supplies, triggering rolling outages in a desperate bid by power companies to avoid toppling the overloaded grid. "We've asked for rotating outages in the PG&E territory," said a spokesman for the California Independent System Operator, which manages most of the state transmission grid. Pacific Gas and Electric Co. (PCG) serves about 13 million people in Northern and Central California: Reuters By Heesun Wee in New York