U.S. Stocks Shed Losses On IBM's Buyback Plan

NEW YORK (MarketWatch) -- U.S. stocks churned higher on Tuesday after IBM Corp. hiked its guidance and said it would buy back $15 billion of its stock, helping offset earlier pressure brought on by surging inflation and declining consumer confidence.

After falling early on, the Dow Jones Industrial Average was more recently up 39.15 points to 12,609.37, with 15 of its 30 components posting gains, led by IBM, up 2.5%.

Blue-chip laggards included American Express Co. , General Electric Co. , and AT&T Inc. .

Another blue chip, automaker General Motors Corp. , edged lower as a key GM supplier staged walkouts at several plants.

The S&P 500 gained 1.64 points to 1,373.44, while the technology-heavy Nasdaq Composite rose 2.11 points to 2,329.72.

Google Inc. was among the technology shares weighing on the market, with the online giant off 7.5% in the wake of a late Monday comScore report showing lower paid-click search rates for Google.

In commodities trade on the New York Mercantile Exchange, crude gained $1.08 to $100.31 a barrel, and gold gained $4.10 to $944.60 an ounce.

The dollar withered, with an index measuring the greenback against six major currencies at 75.21, off from 75.498 in late U.S. trade on Monday.

Volume on the New York Stock Exchange came to 481 million, with advancers passing decliners 9 to 5. On the Nasdaq, 363 million shares traded, with advancing issues outrunning those declining, also 9 to 5.

Ahead of the opening bell, the Labor Department said escalating energy and food prices fueled a 1% climb in the January producer price index. The core PPI, which excludes food and energy, rose 0.4%, above the anticipated 0.3%. .

"Ongoing strength in headline inflation and the continued upward drift in core rates should keep the (Federal Open Market Committee) hobbled by inflation risk, despite the greater focus at the Fed on downside economic risk," said analysts at Action Economics.

Other Tuesday data had Standard & Poor's reporting U.S. home values fell 8.9% in 2007, the largest drop in 20 years. .

Target off-target

Target pointed to a weakening economy as its fourth-quarter earnings fell to $1.03 billion from $1.12 billion in the year-ago period.

In other earnings, Home Depot reported a 27.5% profit fall a day after smaller rival Lowe's unveiled a 33% profit fall. Home Depot expects 2008 adjusted earnings per share to fall as much as 24% on a 5% sales fall.

Office Depot reported a 85% profit fall, and broadcaster CBS Corp. said its profit dropped 15%.

Foster Wheeler fell nearly 8% as its 24% profit rise didn't meet analyst estimates and the engineering firm reported a decline in margins.

Electronics retailer RadioShack reported a 20% profit rise.

Merrill Lynch & Co. Inc. restated its cash flows for fiscal 2005 and 2006, and said the restatements were the result of errors that offset each other. Separately, the bank fired two private bankers in Asia due to "policy breaches."

Potentially market-moving events for the day include a scheduled speech by Federal Reserve Vice Chairman Donald Kohn.

In overseas trade, European shares climbed for a second session, with financial stocks fronting the climb. .

A key gauge of German business climate unexpectedly improved in February.

In Asia, stocks closed on a mixed note after a volatile session that had indexes in Tokyo, Shanghai, Seoul, Singapore, Taipei, Jakarta and Bangkok waver between negative and positive territory. .

By Kate Gibson