updated 2/5/2004 7:49:48 AM ET 2004-02-05T12:49:48

Investors, uncertain about the direction of the economy, sent stocks fluctuating throughout an erratic trading session Monday, with prices ending mixed. Blue-chip stocks finished higher while technology stocks extended their recent slide.

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The market struggled to interpret the latest reading on manufacturing from the Institute of Supply Management. Although the group’s index of business activity reached a healthy 63.6 in January, up from 63.4 in December, the figure was slightly off analysts’ expectation of 64, and many investors were disappointed.

Stocks did manage a rally during the afternoon, but for the most part, only the big-name stocks held their gains. Such ambivalence was perhaps to be expected in a market that has seen two weeks of declines after having reached its highest levels since 2001.

“Stocks rose between mid-November and mid-January at an annualized rate of almost 80 percent per annum,” said Rod Smyth, chief investment strategist for Wachovia Securities. “This market clearly cannot sustain this kind of growth, no matter how good earnings may be. You’re going to see a lot of churning like this over the next couple of months.”

The Dow Jones industrial average finished Monday up 11.11 points, or 0.1 percent, at 10,499.18, after losing more than 50 points in the morning and posting a gain of more than 80 points in the afternoon.

Broader stock market indicators were mixed at the close of trading. The Standard & Poor’s 500-stock index was up 4.13 points, or 0.4 percent, at 1,135.26, while the technology-packed Nasdaq composite index fell 3.00 points, or 0.2 percent, to 2,063.15.

Analysts said some of afternoon buying was due to investors who realized that earnings reports released over the past two weeks were probably better than they initially thought.

“Overall, we’ve got earnings coming in that are ahead of consensus and great underlying economic fundamentals,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “There’s a lot of retail investors who missed a lot of this run and so you have a lot of jump on the bandwagon mentality to help you recover.”

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Investors were also buoyed by an influx of cash into the market, due to a top-tier firm pulling money out of bonds and putting it in stocks, according to Keith Keenan, vice president of institutional trading at Wall Street Access. It was not immediately clear which firm carried out the transactions.

“It was fairly busy in the latest flurry,” Keenan said. “It’s that kind of market. Little things rouse people pretty quickly.”

International Paper Co. reported a fourth-quarter profit of 23 cents per share before one-time charges, beating Wall Street expectations by 5 cents. Shares were up 30 cents at $42.57.

Gannett Co. advanced 4 cents to $85.75 after the media company announced a 3 percent increase in quarterly profits, meeting analysts’ estimates.

Semiconductor stocks fell after the Semiconductor Industry Association reported an 18 percent hike in chip sales in 2003. Intel Corp. fell 24 cents to $30.28, while Advanced Micro Devices Inc. lost 23 cents to $14.63.

Buoyed by a large increase in defense spending in President Bush’s $2.4 trillion budget proposal, defense companies also gained, with Boeing Co. up 73 cents at $42.48 and Raytheon Co. rising 48 cents to $30.99.

Ford Motor Co. shed 60 cents to $13.94 after Deutsche Bank cut its rating on the company from “hold” to “sell” due to doubts the automaker could meet earnings goals.

The Russell 2000 index of smaller companies closed the day down 0.22 point, or 0.04 percent, at 580.54.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume was moderate.

Overseas, Japan’s Nikkei stock average closed Monday's session down 0.1 percent. In Europe, Britain’s FTSE 100 closed down 0.2 percent, France’s CAC-40 finished 0.7 percent higher and Germany’s DAX index closed up 0.3 percent.

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