Safety Plays Pay

At 12:44 p.m. ET, the Dow was down 5 points to 11988 despite interest in Altria (MO), Coca-Cola (KO) and ATT (T). The Nasdaq slipped 5 to 2332 notwithstanding gains by Apple and EBay (EBAY). The S&P 500 slipped 2 to 1364.

Financials and manufacturers were weak, negating gains by telecoms, drillers, miners, package shippers and drug makers. The broader marker has made little headway this week, its rally stalled by the nitty-gritty of earnings and valuations.

Crude rallied to $58.75 a barrel after Saudi Arabia backed an OPEC production cut. The Saudi oil minister signaled a willingness to reduce output further in December in order to prop up a well-supplied market.

With the Iraq war going badly, Democrats were poised for midterm election gains that could net them control of the House and possibly of the Senate as well.

Whatever comfort investors drew from the improved results at UPS (UPS) and the courier's 'solid" outlook for the holidays was offset by Honeywell's (HON) hints that profit growth could slow next year in line with "modest softening in global economic growth." The fourth-quarter profit plan fell shy of expectations.

Bargain-hunters preferred to insure themselves against an economic chill with UnitedHealth (UNH) shares getting a boost from strong profit growth following the CEO's ouster amid an options scandal. Boston Scientific (BSX) also perked up as its return to profit suggested a gradual recovery from the safety problems afflicting several of its top earners, including drug-eluting coronary stents.

Pfizer's (PFE) prowess in pushing Lipitor overcame concerns about a drug pipeline that's not expected to produce growth until 2009. Traders showed less appetite for McDonald's (MCD) since the resurgent fast-food chain had already previewed strong results boosted by overseas gains and the introduction of premium coffee.

That other Mac merchant, Apple, sold 1.6 million computers during its most recent quarter, the 30% increase in a year's time aiding a 27% jump in earnings. Meanwhile, Dell (DELL) shipped six times as many PC's over that span according to the market share trackers at Gartner, but it still wasn't enough as Hewlett-Packard (HPQ) grabbed the global lead. Dell investors threw a tantrum. Overseas tech bellwethers didn't have much better luck, as Sony (SNE) slashed its forecast by nearly two-thirds to cover the costs of a big battery recall, while Nokia (NOK) got nicked by its diminished handset margins.

Declining margins were also the big worry with AMD, amid a price war with archrival Intel (INTC). Prices on the AMD processors for desktop PCs dropped by approximately 9% during the quarter. AMD did forecast more growth in the coming period, but its costs are also set to rise.

EBay extended its recent rebound after reporting a 31% gain in revenue. Without the hit from the expensing of options, profit growth would have totaled 30%, rather than 10%.

Coke delivered bubbly volume growth of 5% along with Street-beating results. The Chinese, Brazilians and Russians proved especially thirsty. For once, the carbonated colas kept pace with the demand for healthier drinks, whose sales proved somewhat disappointing.

Traders were less enthused about Citigroup's (C) 6% bump in operating profit and revenue that fell short of expectations on the more lucrative investment banking end.

At least Citi has investment banking to fall back on. WaMu shares slipped after the biggest U.S. thrift posted earnings 10% below Wall Street's expectations. The company blamed shrinking lending margins attributable to the inverted yield curve, as well as diminished demand for mortgages.

Hershey's (HSY) report also tasted more bitter than sweet after the chocolate maker disappointed on earnings and admitted losing market share to rival Mars.

Investors preferred coal stocks, after Peabody Energy (BTU) exceeded earnings expectations.

Bonds recovered some of their early losses after an unexpectedly slender uptick in the index of leading economic indicators was followed by the second consecutive decline in the factory gauge compiled by the Philadelphia Fed. Economists had been expecting a rebound. The 10-year Treasury yield returned to 4.77%.

Overseas markets were mixed, with Bombay's 1% setback offset by a comparable gain in Singapore. Europe never did get marching orders from New York, finishing flat. The dollar headed lower.