Investors flock
to blue chips

NEW YORK » Conflicting signals on inflation kept stocks mixed yesterday as investors abandoned riskier stocks and moved to safer blue-chip companies. A sharp drop in oil prices helped limit Wall Street's losses.

A surprising increase in first-time jobless claims unnerved the market but also eased fears among some investors that inflation would rise as more workers enter the job market.

Inflation worries were bolstered, however, as the dollar fell to a nine-week low against the euro. That stole momentum from crude oil prices -- another inflationary concern -- which fell after Wednesday's sharp rise. A barrel of light crude settled at $53.54, down $1.23, on the New York Mercantile exchange.

"This appears to be a fairly defensive market ... while investors figure out what to do next," said Stuart Freeman, chief equity strategist for A.G. Edwards & Sons. "I think the market is still jittery about inflation. There are no real drivers to push us solidly in any direction."

The Dow Jones industrial average rose 45.89, or 0.42 percent, to 10,851.51.

Broader stock indicators were narrowly mixed. The Standard & Poor's 500 index was up 2.24, or 0.19 percent, at 1,209.25, and the Nasdaq composite index lost 1.57, or 0.08 percent, to 2,059.72.

The bond market made modest gains after a big selloff Wednesday. The yield on the 10-year Treasury note fell to 4.47 percent from Wednesday's eight-month high of 4.53 percent.

The technology sector was under scrutiny as investors looked at news from two major semiconductor companies. Dow component Intel Corp. edged a penny higher to $24.85 before its mid-quarter earnings update, released after the session. The company had a better than expected outlook, raising the low end of its first-quarter revenue projection and forecasting wider gross margins for the same period. Intel stock rose 59 cents, or 2.4 percent, to $25.44 in extended trading.

National Semiconductor Inc. was up $1.13 at $21.12 after the company beat analysts' profit forecasts by 5 cents per share in its latest earnings report.

Microsoft Corp. announced it was purchasing privately held Groove Networks, which makes software for online work collaboration, for an undisclosed amount. Groove founder Ray Ozzie, one of the creators of Lotus Notes in the 1980s, will become Microsoft's chief technical officer, reporting to chairman Bill Gates. Microsoft rose 12 cents to $25.43.