The Dow pulled off a gain in the final minutes of trading Wednesday as investors scooped up recovery plays in the industrial, consumer discretionary and technology sectors.
But health care and telecom stocks ended lower amid worries about the outlooks in those sectors.
The Dow rose 7.86, or nearly 0.1 percent, to close at 11,124.92, led by Boeing and United Technologies. The tech-heavy Nasdaq gained 0.2 percent, while the S&P 500 slipped 0.1 percent.
Volatility seems to have subsided as well: After pushing 20 last week, the CBOE volatility indexended today below 17.
Oil pricesslipped to $83.68 a barrel after U.S. government data showed an unexpected increase in crude inventories and fuel stocks. The dollar rose against the euro and gold pricesrose to nearly $1,150 an ounce.
AT&T topped forecasts as the company added 1.9 million subscribers during the quarter but investors sold off the stock amid worried that the number of new subscribers with contracts added was nearly half of what it was a year earlierand the lowest since 2004, suggesting the market may be getting saturated.
Other telecoms and related stocks were also lower, Qualcomm , the largest maker of cellphone chips, which reports after the bell today.
Qualcomm beat earnings estimates amid double-digit incrase in chip sales during the quarter but delivered a forecast that was weaker than what Wall Street had expected.
There were also some weak outlooks from the health-care sector, including Abbott Labs and Gilead Sciences, which slashed their full-year outlooks, citing costs from health-care reform.
Expectations are tough this quarter: Ninety-four percent of companies have beat Wall Street estimates so far, but "less than half of the companies that beat expectations traded up on earnings," analysts at Jefferies pointed out in a research note.
Banks had moments of strength today but ended mostly lower amid renewed worries about financial reform after a Senate panel today voted to ban banks from the lucrative swaps market, one of the strictest financial-reform measures proposed to date.
President Obama is heading to New York Thursday to try to convince Wall Street to get behind financial reform.
Bank of America and JPMorgan were among the biggest decliners on the Dow. Citigroup also ended lower.
Morgan Stanley continued the parade of big-bank beats, swinging to a profit of 99 cents a sharein the first quarter from a net loss of 57 cents a share a year earlier amid strong trading revenue. Its shares ended up 4 percent.
This came after Goldman Sachs reported its earnings doubledduring the quarter.
But Wells Fargo skidded 2 percent after the bank reported its profit fell amid a drop in mortgages.
However, this morning brought some good news on the housing front: Mortgage applications bounced back from three-month lows last week as buyers rushed to take advantage of the federal-tax credit before it expires and refinancing picked up. The average on the fixed 30-year dropped to around 5 percent.
Apple shares shot up 6 percent after the company reported its earnings doubledduring the quarter as investors cheered the company's position, including news that its market share of the future customer base — college students and Chinese consumers — is on the rise. In addition, at least 16 brokerages raised their price targets on the iPhone maker.
Elsewhere, McDonald's posted earnings of $1 a share, slightly ahead of estimates, while Boeing also beat estimates.
Yahoo and Seagate Technology also beat Street estimates with their latest numbers after the bell Tuesday, but Yahoo shares tumbled as investors questioned the profitability of the firm's search business.
Altera sharesdropped despite the fact that the company reported better-than-expected quarterly earnings and predicted second-quarter revenue would beat Wall Street estimates. At least eight brokerages raised their price targets on the semiconductor firm.
After the bell, earnings reports from eBay, E*Trade, Qualcomm and Sandisk will be released, among others. The morning's notable reports include Pepsi and Verizon.
Despite positive signs from corporate earnings, some investors are growing concerned that stocks can't continue to push higher.
Markets are in a "very dangerous situation" because they are over-extended, Philippe Gijsels, head of research at BNP Paribas Fortis Global, told CNBC. "I think we're very close to the end of this buying frenzy," he warned.
Investors have been buying on dips because there is still a lot of liquidity around and some have been making up for missing the rally, Gijsels added.
Transocean shares dropped after an explosion and fire on Tuesday at one of the company's drilling rigs off the Louisiana coast, which left up to a dozen crew members missing and at least seven critically wounded.
Airline stocks were mostly lower after the industry lost an estimated $1.7 billion in revenue in the aftermath of the Icelandic volcano. United Parent UAL and Continental shares tumbled as merger talks continued. United is also in the midst of talking about a possible merger with U.S. Airways .
Also on the M&A front, Google slipped amid buzz that the Internet giant may be in talks to acquire travel-software maker ITA Software in an attempt to break into the online-travel booking business. Reports suggest the deal could be as much as $1 billion.
Volume was slightly more than average, with 1.21 billion shares changing hands on the New York Stock Exchange. Decliners outpaced advancers, roughly 4 to 3.
Still to Come:
WEDNESDAY: Earnings from eBay, Starbucks, Qualcomm & Sandisk after the bell
THURSDAY: PPI; weekly jobless claims; existing-home sales; Earnings from Pepsi, Verizon, Fifth Third, PNC Bank, American Express, Microsoft & Capital One
FRIDAY: Durable-goods orders; new-home sales; Earnings from Travelers, Honeywell, Schlumberger & Xerox
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