* IBM, eBay earnings drag down tech
* Goldman Sachs falls after earnings
* Verizon earnings boost lifts telecoms
* Indexes: Dow off 0.4 pct; S&P up 0.3 pct; Nasdaq up 0.25
By Julia Edwards
NEW YORK, Oct 17 U.S. stocks neared record highs
on Thursday as investors regained confidence in the market
following a last-minute deal to avoid a U.S. default, but
weakness in IBM pulled the Dow lower.
The S&P 500 reached 1729.64, just under its record intraday
high of 1729.86 on Sept. 18. The CBOE Volatility Index, a
measure of investor anxiety, fell to 13.60, its lowest since
Sept. 26, the week before the government shutdown began.
Congress on Wednesday approved an 11th-hour deal to end a
partial government shutdown and pull the world's biggest economy
back from the edge of default.
"This has been a market with a 'buy the dip' mentality. If
investors are convinced money is going to flow into the market
for whatever reason, they may not want to miss that run up,"
said Quincy Krosby, market strategist for Prudential Financial
The Dow, however, fell, pulled down by International
Business Machines Corp's shares. That stock hit a
two-year low a day after reporting weaker-than-expected revenue,
and accounted for 78 points off the Dow Jones industrial
average. IBM was the biggest decliner on the S&P 500, trading
down 6.8 percent to $174.04.
The political wrangling has led some investors to believe
the U.S. Federal Reserve will have no choice but to leave its
fiscal stimulus measures in place for several more months. This
could bolster stocks in coming months.
"We never really had a chance to have a nice rally off the
Fed's lack of tapering because when we got the news back in
September everyone started worrying about the budget situation,"
said Paul Zemsky, chief investment officer for multi-asset
strategies for ING Investment Management.
A Reuters survey showed economists have grown less
optimistic about prospects for the economy as the fight over
fiscal policy takes its toll.
The Dow Jones industrial average was down 55.66
points, or 0.36 percent, at 15,318.17. The Standard & Poor's 500
Index was up 4.70 points, or 0.27 percent, at 1,726.24.
The Nasdaq Composite Index was up 9.48 points, or 0.25
percent, at 3,848.92.
On a revenue basis, 54.4 percent of companies in the S&P 500
have bested Wall Street estimates, below the 61 percent average
since 2002 but above the 49 percent average for the past four
EBay Inc dropped 3.9 percent at $51.46 as the
biggest drag on the Nasdaq 100 index after the company
gave a disappointing holiday forecast on Wednesday, saying the
U.S. economic environment had deteriorated partly because of the
Goldman Sachs shares fell 2.6 percent to $158 after
the fifth-largest U.S. bank by assets said its quarterly profit
dropped amid weak bond-trading volumes.
Verizon Communications Inc was a bright spot as
shares rose 3.3 percent to $48.79 after the company posted
stronger-than-expected third-quarter earnings and
The number of Americans filing new claims for unemployment
benefits dropped from a six-month high last week but remained
elevated as California continued to deal with a backlog related
to computer problems.
The pace of manufacturing growth in the U.S. mid-Atlantic
region slowed slightly in October, but firms' optimism about the
future hit a 10-year high, the Philadelphia Federal Reserve Bank