Stocks mixed in erratic trading

The technology-laden Nasdaq stock index rose Tuesday as Apple unveiled a hotly anticipated mobile phone and boosted optimism about the tech sector, while blue-chip stocks slipped as lower oil prices hit energy shares.

Apple unveiled a mobile phone with a touch screen that combines features from its iPod music player, sending its shares up 8.3%. “There is a lot of enthusiasm over Apple,” said Tim Woolston, portfolio manager at Boston Advisors Inc. Also, “you’ve got a lot of folks suggesting that ’07 will be a good year for tech earnings because of capital expenditure budgets.”

The Dow Jones industrial average fell 6.89 points, or 0.1%, to end at 12,416.60. The Standard & Poor’s 500 index was down 0.72 points, or 0.1%, at 1,412.12. The Nasdaq composite index was up 5.63 points, or 0.2%, at 2,443.83.

Trading was erratic as investors wrestled with the positive and negative effects of a continuing slide in oil prices. Warm weather in the Northeast has weakened demand for energy, and at one point drove a barrel of oil to below $54 a barrel. At the close, oil futures fell 45 cents to $55.64 a barrel.

Not only did this drag shares of major oil and gasoline companies to two-month lows, but it caused institutional investors such as hedge funds to rethink their positions, analysts said. Some big investors might be taking cash off the table on concern that demand for crude might not re-emerge in the near term, analysts said.

“There’s a huge financial position on the point of hedge funds and other financial players having positions in oil futures,” said Jason Maxwell, a managing director with Trust Co. of the West. “People might be unwinding that position because there’s so much supply.”

Although there were plenty of fluctuations in stocks, fixed-income trading remained even-keeled, with little economic news for traders to act on. Bond yields edged higher, with the benchmark 10-year Treasury rising to 4.66% from 4.65% on Monday.

The drop in oil prices was originally one of the market’s biggest motivators, sending shares of transports and retailers higher. Investors bet that lower prices at the pump would cause consumers to spend more in stores and that trucking companies would spend less to fuel their fleets.

But that decline in turn sent shares of major oil and gasoline companies sliding as lower prices could cut into profits. Exxon Mobil fell 56 cents to $72.09 and Chevron dropped 82 cents to $70.63.

Todd Salamone, senior vice president of research at Schaeffer’s Investment Research in Cincinnati, said the drop in oil also indicated some technical trading. He said the flip-flop nature of the session had become the norm in the first few weeks of trading in 2007 as investors adjusted their portfolios.

“There is no strong reason to commit to buying stocks right now and no strong reason to commit to selling them either,” he said. “This is a microcosm seen since early December with a trading range mentality.”

In other market highlights:

* Apple jumped $7.10, or 8.3%, to $92.57 for its largest gain since July and the best performance in the S&P; 500 on optimism the company’s new mobile phone would increase sales.

But shares of some e-mail device makers fell after Apple said the iPhone had a calendar and worked with most e-mail services. Research in Motion, maker of the BlackBerry e-mail phone, sank $11.16 to $131. Palm, which makes the Treo e-mail phone, declined 84 cents to $13.92.

* Among other tech issues, IBM added $1.17 to $100.07 and Dell climbed 67 cents to $26.84. Dell, the second-largest personal computer maker, said it planned to start a service next year that would ship new computers with customers’ data pre-installed.

* Calabasas Hills-based Cheesecake Factory climbed $2.43 to $26.99. The casual-dining chain said in a preliminary statement that fourth-quarter revenue was $360.4 million, which topped the average estimate of $350 million by analysts surveyed by Bloomberg.

* Earnings season unofficially kicked off after the closing bell when Alcoa posted results. The world’s largest aluminum producer said fourth-quarter profit rose 60%, and its revenue sailed past Wall Street expectations.

Alcoa shares surged nearly 5% in after-hours trading, after advancing 4 cents to $28.52 in the regular session.

* Shares of Sprint Nextel tumbled 11.2%, or $2.19, to $17.45. The phone service provider said late Monday that profit in 2007 would remain under pressure because of lower margins and revenue that would be flat or slightly higher.

* Borders Group slid 34 cents to $21.75, after the bookstore chain said fourth-quarter profit would miss expectations.

* Retailers advanced on data showing that industrywide sales last week enjoyed the largest gain since mid-October. Wal-Mart Stores advanced 39 cents to $47.39. Target added 91 cents to $58.26.