Stocks close mixed ahead of earnings reports

NEW YORK — Wall Street started the week with a mixed performance today, with many investors moving to the sidelines as they wait for quarterly profit reports.

Stocks had popped higher in earlier trading, encouraged by talk of a $5 billion private equity investment in Washington Mutual. The nation's largest thrift is reportedly in discussions with buyout shop TPG and other investors about selling a stake in itself in return for cash.

But with earnings on tap and the Federal Reserve issuing minutes from its March meeting on Tuesday, the stock market pulled back cautiously.

The Dow Jones industrial average closed up 3.01, or 0.02 percent, to 12,612.43, after rising more than 120 points earlier in the day. Dow component Microsoft closed unchanged at $29.16; Boeing, another Dow stock, fell 67 cents to $74.98.

Broader stock indicators finished mixed. The S&P 500 index closed up 2.14, or 0.16 percent, at 1,372.54, after rising as high as 1,386.74. The Nasdaq composite index fell 6.15, or 0.26 percent, to 2,364.83.

The broader market started selling off when the Standard & Poor's 500 index began approaching the levels where it stood before Wall Street's massive sell-off in early March, noted Ryan Detrick, senior technical strategist at Schaeffer's Investment Research.

"When the market closes, first-quarter earnings kick up — it looks like people are taking money off the table ahead of those," Detrick said. "We had a good rally. We're thinking the next major driver will be those earnings reports."

After trading ended, aluminum maker Alcoa reported that its net income fell 54 percent in the first quarter compared with the same period a year ago. The results missed analysts' forecasts.

Government bond prices fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, jumped to 3.55 percent from 3.47 percent late Wednesday.

Though the stock market has not recovered all the ground it lost in March, when the credit crisis reached a critical point and led to the buyout of Bear Stearns Cos., investors launched a strong comeback last week. Wall Street is growing more optimistic that stocks and the companies that issue them may be starting to rebound from a long slump due to tight credit and a sluggish economy.

"Overall, I'm getting the sense here that the Street is starting to focus on fundamentals and the timing of a potential recovery in the economy, and trying to move past the credit crisis," said Craig Peckham, market strategist at Jefferies & Co.

That's not to say the market volatility seen over the past several months has subsided for good, however. As earnings pour in over the next couple of weeks, it's possible investors could grow anxious again — especially if banks reveal bigger losses than expected, Peckham said, and in more types of debt than anticipated.

Alcoa's results might stir some of that anxiety. The company said it earned 37 cents a share in the first quarter, compared with analysts' expectations of 48 cents. The company's stock was down $1.56, or 4 percent, at $37.44 in regular trading and fell further in after-hours dealings.

But there were many signs during the day that Wall Street was feeling more optimistic.

After news that Washington Mutual might sell a stake for cash — a move that other banks such as Citigroup., Merrill Lynch & Co. and Morgan Stanley have also made — WaMu shares shot up $2.98, or 29 percent, to $13.15. Other banks rose as well; Merrill rose $1.30, or 2.8 percent, to $47.55, and Bear Stearns rose 20 cents to $10.67 and Goldman Sachs rose $3.33 to $178.73.