Stocks ended mixed with the Dow snapping an eight-day winning streak as weak tech earnings weighed on the market. But hopes for a possible resolution to the political unrest in Egypt lifted equities off their intraday lows.
The Dow Jones Industrial Average fell 10.60 points, to close at 12,229.29, after squeezing out an eighth straight day of gainsin the previous session. But the index is still on pace for its 10th weekly gain in 11 weeks.
Cisco, Microsoft and Wal-Mart fell, while AT&T and Intel were higher on the blue-chip index.
The S&P 500 eked out a gain of 0.99 points, to finish at 1,321.87 and the Nasdaq rose 1.38 points, to end at 2,790.45. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose above 16.
Among the key S&P 500 sectors, techs, consumer staples and financials were lower, while energy and telecom stocks were higher.
Despite the day's pullback, some strategists continued to remain optimistic on the market.
"I'm not saying the market is desperately cheap, but it's certainly not overly giddy either," Jack Caffrey, market strategist at Stifel Nicolaus told CNBC. "We're overweight equities and we continue to be cautiously optimistic about the direction for the economy."
Meanwhile, Egypt's Hosni Mubarak confirmed he would not run for the presidency againand said those who died during Egypt's unrest did not die in vain, adding he felt the pain of those who had lost family members.
"I think it's a near-term net positive for the markets as it lowers the blood pressure on what was a very tense situation," David Joy, chief market strategist at Columbia Management told CNBC.
Meanwhile, some experts told investors to watch commodity prices.
"This is a commodity inflation issue that is running across the Middle East," Dan Dicker, senior contributor for The Street, told CNBC. "The government is getting involved and they're stockpiling right and left...this is the real issue that's going on in the Middle East and a simple regime change over in Egypt doesn't change that. The commodity trade is the one that you should be on."
Oil futures posted slight gains to trade above $87 a barrelin extended-trading after the news. And the dollar rose broadly, while the euro slumped as investors worried about Europe's lack of progress in tackling a sovereign debt crisis.
In earnings news, Pepsi narrowly beat profit estimatesbut saw its shares slip on a disappointing outlook.
Cisco shares plunged more than 10 percent after the tech bellwether posted a better-than-expected profit after-the-bell Wednesday, but its revenue forecast was lower than expected while its margins came under pressure. In addition, at least two brokerages cut their price targets on the tech giant.
Also weighing on the tech sector, Akamai shares plummeted roughly 15 percent after the Internet delivery company said it expects current quarter results below expectations. In addition, at least three brokerages lowered their price targets on the company.
And Activision Blizzard shares slipped more than 5 percent after the videogame publisher's outlook missed expectations and it will shut down the unit that makes "Guitar Hero" music games.
Credit Suisse shares tumbled more than 7 percent after the bank missed profit expectationsdue to debt charges and cut its return on equity target due to tighter capital regulations.
And Sprint's revenue rose 6 percentand it added mobile subscribers for the first quarter in more than three years, sending its shares up in pre-market trading.
Whole Foods soared more than 10 percent after the upscale grocer raised its 2011 profit outlook after a sharp acceleration in sales, diminishing fears of a growth slowdown. In addition, Jefferies raised its price target on the firm to $64 from $60.
Kraft and Expedia are slated to report earnings after-the-bell.
Gold prices settled near $1,363 an ounceafter the upbeat U.S. jobs news erased some investor appetite for perceived safe-havens.
Treasury prices remained little changedafter the government auctioned $16 billion of 30-year bonds, which had a high yield of 4.75 percent and a bid-to-cover of 2.51.
Volume on Wall Street was stronger than in recent days, which had seen some of the thinnest trade of the year. But with a total of about 8.15 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, volume was still below last year's daily average of 8.47 billion.
In the day's economic news, new claims for jobless benefits fell more than expected last week to hit their lowest level in 2-1/2 years, according to the Labor Department, offering a glimmer of hope that the labor market was strengthening despite Januarys weak figures. Initial claims for state unemployment benefits fell 36,000 to a seasonally adjusted 383,000, the lowest since early July 2008.
Economists polled by Reuters had forecast claims slipping to 410,000. The prior weeks figure was revised up to 419,000, from the previously reported 415,000.
And wholesale inventories jumped 1 percent in Decemberto their highest level in almost two years while sales rose much less than expected, according to a government report. Business inventories rose to $430.5 billion, the highest since January 2009. The gain was greater than the 0.7 percent increase forecast by analysts polled by Reuters.
Foreclosures have continued to rise in January, jumping 12 percent, and more pain is ahead, according to a report by RealtyTrac. And the average rate on the 30-year mortgage topped 5 percent this week for the first time since April. Higher rates could further hamper the struggling housing market.
Shares of Beazer Homes , DRHorton and Pulte slipped.
In other news, the Financial Times reported that the SEC is probing whether traders were using ETFs to disguise insider trading by buying or selling the whole ETF containing a stock rather than just the stock.
On the M&A front, Facebook and Google have held low-key talks about taking over Twitter, according to the Wall Street Journal.
Meanwhile, Facebook is considering letting its employees sell up to $1 billion of their shares to institutional investors, at a price valuing the company at about $60 billion, according to an industry blog.
And NYSE Euronext confirmed it's in advanced talkswith Deutsche Boerse about a merger that would create the world's largest exchange by revenues. In addition, Sandler O'Neill raised its price target on NYSE Euronext to $43 from $37.
The decision of the merger came shortly after the London Stock Exchange agreed to buy TMX Group, the owner of the Toronto Stock Exchange, for $3.2 billion, and follows the Singapore Exchange's bid for Australia's ASX in October 2010.
Verizon started selling Apple's iPhone, ending rival AT&T's three-year exclusivity on the device in the U.S.
EBay shares jumped more than 7 percent after the online auction giant said it expects revenue at its PayPal unit to double by 2013as it seeks to itself as a reinvented company and an innovator at the center of e-commerce.
Shares of major credit card providers MasterCard , Visa and AmEx advanced.
And Wells Fargo's former CFO Howard Atkins stands to walk away from the company with deferred compensation, pension benefits and stock grants valued at $27.21 million, CNBC has learned.
Coming Up This Week:
THURSDAY: Earnings from Kraft and Expedia.
FRIDAY: International trade, consumer sentiment, Nokia analyst day; earnings from Discovery Communications.
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