The market grew jittery after the Philadelphia Federal Reserve said regional manufacturing weakened further in April. The index of manufacturing activity fell to a negative 24.9 from a negative 17.4 in March. The survey found most manufacturing executives were "cautiously optimistic" about future activity, but a report of higher unemployment claims reinforced the market's recession worries.

Merrill Lynch & Co. reported a first-quarter loss of $2.14 billion, a shortfall that was wider than the average analyst estimate. The loss came after the world's largest brokerage wrote down the value of assets tied to mortgages and leveraged loans by several billion dollars. The company also said it would eliminate 3,000 more jobs, for a total of 4,000 in the latest round of cuts. However, Merrill Chief Executive John Thain said during a conference call that business conditions in April appear better than in the first quarter. The stock finished higher.

Merrill's report followed a larger-than-anticipated rise in IBM Corp.'s quarterly earnings, but there were also disappointing results from Nokia Corp., the world's biggest mobile phone company, and drug maker Pfizer Inc.

Dan Laufenberg, chief economist for Ameriprise Financial, said the market remains cautious, though less so than in recent weeks and months.

"The market is going to go up and down. When you have nice moves like you had (Wednesday) and you hold onto most of that gain I think that tends to be a more positive signal," he said.

The Dow Jones industrial average was little changed, edging up 1.22, or 0.01 percent, to 12,620.49, after fluctuating throughout the session.

Broader stock indicators were mixed. The Standard & Poor's 500 index advanced 0.85, or 0.06 percent, to 1,365.56, while the Nasdaq composite index fell 8.28, or 0.35 percent, to 2,341.83.

Advancing issues narrowly outnumbered decliners on the New York Stock Exchange, where consolidated volume came to 3.6 billion shares, compared with 4.1 billion traded Wednesday.

The mixed performance came a day after stocks shot higher in response to stronger-than-expected earnings from JPMorgan Chase & Co., Coca-Cola Co. and Intel Corp. On Wednesday, the major indexes each rose more than 2 percent, with the Dow jumping more than 250 points.

The quarterly reports that investors parsed on Thursday were not as auspicious. Nokia, the Helsinki-based cell phone maker, said its profit rose by a weaker-than-expected 25 percent. It also said its global market share is down slightly. Its U.S. shares fell $4.74, or 14 percent, to $28.95.

Pfizer declined 70 cents, or 3.3 percent, to $20.40 following the company's report that its first-quarter profit fell 18 percent following competition from generics and falling sales of drugs including Lipitor, Norvasc and Zyrtec.

Meanwhile, Harley-Davidson Inc. fell 70 cents, or 2 percent, to $36.09 after the motorcycle maker said its profit declined, that it was cutting hundreds of jobs and that it would ship up to 27,000 fewer motorcycles this year.

Merrill rose $1.82, or 4.1 percent, to $46.71.

Alec Young, an equities strategist for Standard & Poor's, said the fact that Merrill was up, along with most other major financial stocks, was a positive sign, because the market appears to have priced in the economic downturn and the fact that first-quarter earnings aren't going to be strong across the board.

"It just gives a feeling that over all, while the news flow isn't that great, the market has really factored a lot of that in," Young said. "A little bit of red is fairly normal after a day like (Wednesday)."

UBS equities strategist David Bianco agreed. "Considering the nervousness out there about the economy, after a surge, not giving back a chunk of it is pretty encouraging," he said. IBM was among the bright spots, boasting a higher-than-expected 26 percent jump in profits. IBM rose $2.61, or 2.2 percent, to $123.08 and was among the biggest gainers of the 30 stocks that comprise the Dow Jones industrials.

In economic news, the Labor Department said unemployment claims rose last week by 17,000 to 372,000.

Government bonds fell. The 10-year Treasury note's yield, which moves opposite its price, rose to 3.73 percent from 3.71 percent late Wednesday.

Oil prices set another record high overnight, but crude fell 7 cents from Wednesday's close to settle at $114.86 a barrel on the New York Mercantile Exchange, the contract's first closing decline in a week.

Gold prices fell, while the dollar generally rose against other major currencies.

The Russell 2000 index of smaller companies fell 5.39, or 0.76 percent, to 708.00.

Overseas, Japan's Nikkei stock average rose 1.92 percent. Britain's FTSE 100 closed down 1.09 percent, Germany's DAX index fell 0.31 percent, and France's CAC-40 rose 0.15 percent.

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Associated Press Business Writer Eileen AJ Connelly in New York contributed to this report.

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