Stocks mixed; investors try to look past profit news

Consumer sentiment has been high, a preliminary reading shows.
By TIM PARADIS
ASSOCIATED PRESS
NEW YORK -- Stocks were narrowly mixed Friday after profit reports and forecasts from blue-chip names such as International Business Machines Corp. and General Electric Co. failed to impress Wall Street and sent investors searching for other catalysts to drive the markets higher.
Profit concerns have unnerved investors already made skittish by the recent tug-of-war over whether stocks will move higher in 2007 with the same resolve as in 2006. Recent weakness in technology stocks has upset Wall Street and on Thursday led the Nasdaq composite index to its biggest drop since late November.
"I think we're at an extremely pivotal psychological level," said T.J. Marta, economic strategist at RBC Capital Markets. He said earnings and economic data support the Federal Reserve's notion that the economy can pull off a soft landing. Marta contends Wall Street is mulling whether the economy will do a "fly-by" and skip a soft landing entirely with growth continuing apace.
The Fed is unlikely to lower short-term interest rates if the economy continues at a steady clip or if it begins to heat up again. The central bank has left interest rates unchanged at its last four meetings after a string of 17 straight increases that began in 2004. Last year, investors propelled stocks sharply higher partly on the widely held view that the Fed would cut rates perhaps as early as the first half of 2007.
In midafternoon trading, the Dow Jones industrial average was down 6.65, or 0.05 percent, at 12,561.28.
Broader stock indicators were higher. The Standard & amp; Poor's 500 index was up 3.14, or 0.22 percent, at 1,429.51, and the Nasdaq was up 6.12, or 0.25 percent, at 2,449.33.
Bonds drop
Bonds fell as stocks tried to further their gains. The yield on the benchmark 10-year Treasury note rose to 4.78 percent from 4.77 percent late Thursday. The dollar was mixed against other major currencies, while gold prices rose.
Oil rose 1.14 to 51.62 a barrel on the New York Mercantile Exchange. The increase follows sharp declines in recent sessions and could signal that investors are eager to buy oil to cover previous commitments as they head into the weekend.
Though the mood on Wall Street might have soured somewhat in the new year, consumers appear to have remained decidedly upbeat. Consumer sentiment, as tracked by the University of Michigan's survey, showed a preliminary reading of 98.0 for January compared with 91.7 in December. It is the highest showing since January 2004.
Since the start of new year, investors have looked for signals that the robust profit growth seen in 2006 will continue, though perhaps at a slower pace. While a number of the big fourth-quarter earnings reports have been solid, some forecasts have prompted Wall Street to sound a more cautious tone than had been heard in the final months of 2006. Coupled with concern the Fed won't soon lower interest rates, the earnings news has held stocks to modest gains.