updated 10/21/2004 9:17:51 AM ET 2004-10-21T13:17:51

Wall Street wavered Wednesday, leaving stocks mixed as oil prices soared on bleak inventory data and investors digested a disappointing earnings report from J.P. Morgan Chase & Co. Technology shares advanced on strength in semiconductor stocks.

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A shortfall in gasoline and heating oil pushed crude prices back above the $54 level, solidly reversing a two-day retreat. Inventories of distillate fuels, which include heating oil and diesel, fell for a fifth week, renewing worries that high energy prices will eventually slow consumer spending and dent corporate bottom lines. The data also distracted investors from a slew of profit reports.

“This will go down as the earnings season that fell on deaf ears,” said Arthur Hogan, chief market analyst at Jefferies & Co. “The major news is oil prices, and what that will do to consumer demand, the economy, corporate profits and the future. That’s the driver. Does it have an effect? It is the focus. It’s larger than earnings, and right now it’s larger than the election.”

At Wednesday's close the Dow Jones industrial average was off 10.69 points, or 0.1 percent, at 9,886.93, while the broader Standard & Poor’s 500-stock index was up 0.4 point, or 0.04 percent, and closed at 1,103.66.

The tech-rich Nasdaq composite index saw a gain of 10.07 points, or 0.5 percent, at 1,932.97, partly due to strength in the chip sector. The Philadelphia Semiconductor Index advanced 1.31 percent a day after bellwether International Business Machines Corp. delivered better-than-expected earnings and an upbeat forecast for high-tech spending.

Growing concern about how much energy prices will weigh on the economy in the months ahead kept Wall Street’s attention riveted on oil prices. Fears about a narrowing global supply cushion sent crude dashing from $35 a barrel to $55 a barrel in just seven weeks, and the fact that oil remains at lofty levels has cast a long shadow over stocks. The government’s inventory report, which showed lower-than-expected supplies of crude and refined products, sent oil futures surging $1.63 to settle at $54.92 on the New York Mercantile Exchange.

A number of other factors were pressuring stocks as well, including the ongoing investigation of the insurance industry by the New York attorney general’s office, recent negative news for big drug makers and general uncertainty surrounding the presidential race. Investors have also been watching earnings reports for signals that the economy might pick up before the end of the year, but indicators have been mixed so far. Some analysts remained upbeat, noting that the fourth quarterly tends to be a seasonally strong period.

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“In view of all of the worries, the election, oil being stubbornly above $50 a barrel, for the market to be where it is, is pretty impressive,” said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee. “Any catalyst, I think, could really get the market going. I think there’s a lot of buying power out there, it’s just a matter of having the courage to step in.

J.P. Morgan Chase shed 73 cents to $37.25 after reporting a 13 percent drop in third-quarter profits, in part due to costs related to its merger with Bank One. Earnings for the nation’s second largest bank missed estimates by a wide margin.

Pfizer Inc. lost 70 cents to $28.30, after it said profits could slow in 2005 as patents on key products expire. The warning came as the world’s largest drug company beat Wall Street’s third-quarter earnings estimates on strong sales of its cholesterol drug Lipitor and pain reliever Celebrex.

United Technologies Corp. was down 15 cents at $89.90, even after reporting a 13 percent increase in third-quarter profits amid the continuing recovery of the aerospace industry and strong growth at its Otis elevator division.

Overseas, Japan’s Nikkei average lost 1.65 percent. In Europe, France’s CAC-40 was down 0.94 percent, Britain’s FTSE 100 declined 0.83 percent and Germany’s DAX sank 1.30 percent.

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