Dow nearly hits a new high; Yahoo slammed

Stocks ran up against record highs set back in February, only to be slapped back as profit-taking kicked in.

The Dow Jones industrials moved past their Feb. 20 high of 12,786 for a few minutes around noon ET. By the close, however, the blue-chip index was 13 points short of the record. It still finished with a gain of 53 points, 0.4%, to 12,773. The Standard & Poor's 500 Index was up 3 points to 1,471, and the Nasdaq Composite was down 1.4 points at 2,517.

After the bell, Intel (INTC, news, msgs) reported results that cheered Wall Street. IBM Corp. (IBM, news, msgs) and Yahoo (YHOO, news, msgs), however, disappointed investors. Yahoo was getting especially pummeled in after-hours trading, falling nearly 8% to $29.53.

Bulls were cheered by the Dow's 12th gain in 13 sessions. The S&P continued to march past levels last seen in the late summer of 2000.

And the market didn't seem all that concerned that the British pound rose to $2.01 in currency trading for the first time since Sept. 16, 1992. Traders suggested the problem wasn't with the United States but more a reflection of higher inflation and interest rates in Britain than in the U.S.

Profit-taking in the stock market -- or what the technicians call resistance -- is to be expected. Stocks and indexes frequently make a number of runs at recent highs before they finally push through. The catalyst seemed to be pullbacks in stock markets in Canada, Brazil and Mexico, CNBC's Bob Pisani said.

Still, a break-through will come, said Jeffrey Hirsch of the Hirsch Organization and editor of the Stock Trader's Almanac. The market should move higher, he said, because there aren't a lot of huge threats. If today's Consumer Price Index report is any indication, core inflation is under control. (Since core inflation strips out food and energy, that may be little solace to anyone who has filled a gas tank lately.) Employment is steady, if not great, and interest rates are still at historical lows.

Hirsch thinks 2007 will prove to be a decent year for investors, if only because it is the third year in a U.S. presidential cycle, always the strongest of the four years.

He still expects the Dow to hit 14,000 sometime this year, which would be a 14% gain from Dec. 29. The S&P may reach 1,600, and the Nasdaq could hit 2,800. Some strength may be seen in the next month or so before Wall Street and investors start to retreat to the nearest beach. And the market traditionally rallies in the fall.

Separately, The Wall Street Journal said late today that Lightstone Group agreed to buy Extended Stay Hotels from Blackstone Group for $8 billion in one of the biggest noncasino hotel deals in history. The Journal called the deal "evidence of sizzling investor demand for hospitality real estate."

• Video: When will the Dow hit 13,000 -- or will it?

Yahoo earnings disappoint

Yahoo shares were off more than 6% to $30.06 in after-hours trading after the Internet company disappointed Wall Street with first-quarter earnings. Yahoo said it earned 10 cents a share (or $142 million) under regular accounting rules, down 11% from 11 cents (or $160 million) a year ago -- and a penny less than Wall Street estimates. Revenue was $1.18 billion after payments to partners were deducted, up nearly 9% from a year ago. Wall Street had expected $1.21 billion.

Many investors have been betting that the Internet icon had regained its stride after stumbling through much of last year.

For the second quarter, the Internet search company sees revenue at $1.2 billion to $1.3 billion. The Wall Street consensus estimate has been $1.28 billion.

As of the regular close of trading, Yahoo shares were up more than 25% so far in 2007.

IBM doesn't impress; Intel stages a relief rally

After the close, IBM announced first-quarter earnings of $1.21 per share from continuing operations, a 12% increase from $1.08 a share a year ago and in line with Wall Street estimates.

• Get free, real-time stock quotes on MSN Money

First-quarter income from continuing operations was $1.8 billion compared with $1.7 billion in the first quarter of 2006, an increase of 8%. Revenue was $22.0 billion, up 7% from a year ago. But, adjusting for currency changes, the increase was 4%.

Wall Street initially liked the report, but shares later fell back and were down slightly to $96.50.

Meanwhile, semiconductor giant Intel issued lighter guidance for the second quarter and said gross profit margins would be lighter than expected. But results were a relief; Intel and archrival Advanced Micro Devices (AMD, news, msgs) have been waging a fierce price war over the last year.

Intel sees revenue at $8.2 billion to $8.7 billion. Wall Street has been expecting $8.87 billion to $9.2 billion. Its gross margin is expected to come in around 48%.

For the first quarter, the company said it earned 27 cents a share, but that included a gain of 5 cents in a tax settlement. Wall Street was expecting 22 cents for the quarter. So Intel was in line. The gross margin was 50%, better than The Street expected.

Shares were up 2% to $21.40 in after-hours trading from a regular close of $20.98.

Coca-Cola gives the Dow some fizz

Coke is back! Coca-Cola (KO, news, msgs) led the Dow this afternoon with a 2.6% gain to $51.57. The gain was tops among the 30 stocks in the Dow. In about 30 months, the stock has jumped 33%. The reason is that the ship seems to have been righted.

The Dow component reported first-quarter earnings, excluding expenses, of 56 cents per share, 3 cents above analysts' estimates. The beverage maker said sales rose 17% to $6.1 billion, the biggest jump in nearly 10 years.

Coke's sales in North America, which are measured by unit case volume growth, fell 3%, but total case unit volume growth rose 6% in the quarter.

"They're getting good lift from Japan and China, and new products like Coke Zero," Herb Achey, an analyst at U.S. Trust, told Bloomberg News before today's report.

• Robert Walberg says an improved product mix makes Coke shares a buy.

Fellow Dow component Johnson & Johnson (JNJ, news, msgs) also beat expectations, and the stock jumped 2.4% to $64.55, the second-biggest percentage gain among Dow stocks.

While reported earnings of 88 cents per share were down 22% from a year ago, most of the decline was due to special items, including a breakup fee for a deal that crashed. Excluding those problems, the company earned $1.16 a share. Analysts were expecting $1.05 per share. Sales rose 16% to $15.04 billion from $12.99 billion.

"Our solid first-quarter results demonstrate the strength of our broadly-based businesses, especially the strong performance of our pharmaceutical business," J&J CEO William C. Weldon said in a statement after the earnings release.

• Video: CNBC's Mike Huckman discusses Johnson & Johnson's earnings.

At least one analyst agreed. "That drug business seems to be holding up much better than expected," Bruce Cranna, an analyst with Leerink Swann, told Bloomberg today.

Drug stocks, in fact, have been enjoying a pretty good April. The Amex Pharmaceutical Index ($DRG.X) is up 7.3% in April, second-best among 41 indexes that Market Dispatches tracks. Tops is the Amex Gold BUGS Index ($HUI.X), up 8.1%.

Data-storage company EMC Corp. (EMC, news, msgs) reported first-quarter earnings of $312.6 million, or 15 cents per share, a 15% increase from the $272.5 million, or 11 cents per share, the company earned in the same quarter a year ago. Analysts were expecting 13 cents per share.

The company said strong demand for data storage helped the traditionally weak first quarter. The stock jumped 3.1% near the close to $15.22, ninth-best among S&P 500 companies.

Energy prices -- New York close

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$63.10	$63.61	-$0.51	-4.21%	3.36%
Heating oil (per gallon)	$1.7978	$1.8593	-$0.0615	-4.21%	12.51%
Natural gas (per million BTU)	$7.4180	$7.5300	-$0.1120	-4.04%	17.76%
Unleaded gasoline (per gallon)	$2.0558	$2.1157	-$0.0599	-0.11%	28.32%

Inflation worries ease

Americans can concentrate on getting their taxes in today and don't have to worry too much about inflation.

The Labor Department's Consumer Price Index showed a 0.6% increase in March, in line with economists' expectations and up from the 0.4% increase in February.

• Video: CPI data analysis

But the core rate, which excludes food and energy prices, rose 0.1%, slightly lower than the expected 0.2% rise. The core rate had risen 0.2% in February and 0.3% in January.

"We need to see a few more months of lower core readings before the Fed can start to relax," Doug Porter, deputy chief economist at BMO Capital Markets in Toronto, told Bloomberg News.

Housing starts rose 0.8% in March to a seasonally adjusted annual rate of 1.544 million units, a potential indication that the housing slump might be ending. Warmer weather last month allowed builders to begin work on new homes.

Building permits, which are a sign of future construction, rose 0.8% as well in March.

While the results were better than expected, both starts and permits are still running roughly 25% lower than a year ago.

Chrysler still talking with Magna?

The future of Chrysler has been a gray area since mid-February, when DaimlerChrysler (DCX, news, msgs) CEO Dieter Zetsche announced that all options were on the table for the U.S. unit.

Today, a German newspaper reported that talks about a sale of Chrysler to Canadian auto-parts maker Magna International (MGA, news, msgs) are in the advanced stages.

The Frankfurter Allgemeine Zeitung said Magna would take a majority stake in Chrysler, leaving DaimlerChrysler with a minority stake, according to The Associated Press. The report did not cite any sources.

Merrill Lynch analyst John Murphy downgraded his rating on Magna to "neutral" from "buy" today. Murphy said the risk-reward profile in Magna stock has become "less attractive, given the risk associated with the potential acquisition of Chrysler." Murphy said a Magna-Chrysler deal would not be a structural fit. The stock fell 2.3% to $76.89.

Gas prices are rising

With a Nor'easter storm slamming the East Coast, summer doesn't seem anywhere near. But if the price of gas is any indication, summer should already be here. Gas prices for the week ending April 16 were the highest since August.

The Energy Information Administration's weekly survey of gasoline stations across the country showed a 7.4-cent increase to $2.88 per gallon of regular gasoline. San Francisco was the city with the highest prices, at $3.20 per gallon, while Houston was the cheapest, with $2.73 per gallon.

Intelsat up for sale

Satellite operator Intelsat could be the next big private-equity play.

The company is on the market, according to The Wall Street Journal, and its private-equity owners are looking for bids of around $6 billion. Apollo Management, Madison Dearborn Partners, Apax Partners and Permira Advisors bought the satellite company in 2005 for $3 billion.

An approach by private-equity firm the Blackstone Group triggered the potential sale, the paper wrote.

Short hits from the markets -- 4 p.m.

	Tues.	Mon.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	4.860%	4.870%	-0.010	-0.72%	-0.51%
5-year Treasury note yield	4.606%	4.683%	-0.077	1.52%	-2.02%
10-year Treasury note yield	4.688%	4.761%	-0.073	0.86%	-0.47%
30-year Treasury bond yield	4.847%	4.926%	-0.079	-0.02%	0.60%
Currencies
U.S. Dollar Index	81.63	81.87	-0.24	-1.25%	-2.16%
British pound in dollars	$2.008	$1.989	0.019	1.97%	2.45%
Dollar in British pounds	£0.498	£0.503	-0.005	-1.93%	-2.39%
Euro in dollars	1.357	1.354	0.004	1.67%	2.82%
Dollar in euros	€ 0.7368	€ 0.7388	-0.002	-1.64%	-2.75%
Dollar in yen	¥118.89	¥119.65	-0.76	0.98%	-0.11%
Commodities
Gold	$692.50	$694.50	-$2.00	3.51%	8.54%
Copper	$3.6790	$3.5420	$0.14	16.94%	28.14%
Silver	$14.0200	$14.0800	-$0.06	4.24%	8.39%
Crude oil (NYMEX) (per barrel)	$63.10	$63.61	-$0.51	-4.21%	3.36%

Time Warner to reduce stake in Time Warner Cable?

Executives at Time Warner (TWX, news, msgs) are thinking about cutting back the company's 84% stake in Time Warner Cable (TWC, news, msgs), according to The Wall Street Journal.

The cable business is the company's biggest profit-maker, the paper wrote, but increased competition from the Internet is causing executives to ponder such a move. Time Warner would own a significant interest in Time Warner Cable, the paper added.

Time Warner's top guns will present several options for Time Warner Cable at the company's annual strategic review next month. Time Warner was off 1.3% to $20.87.

By Charley Blaine and Elizabeth Strott