U.S. MARKET AVERAGES

Stock averages kept trading near the unchanged mark, dragged by Dow Component DuPont and BP PLC which posted slashed Q4 profit guidance. However, reported brokerage upgrades of Apple Computer and Hewlett-Packard offered some support to the tech sector.

Banc of America Securities raised its Apple price target to $87 from $78 and UBS raised its price target on the stock to $100 from $86. Apple climbed 3.4% extending gains on new products announcements and positive revenue. The stock hit a new multi-year high, boosted by its decision to use Intel Corp. microprocessors, thus getting use of the latest chip technologies and the vast marketing power of Intel. On Tuesday Apple revealed the two new machines-an iMac desktop and a notebook based on the chip makers' new two-brained processor, the Intel Core Duo. Apple's iPods continue to enthrall the public, selling 14 million iPods during the holiday quarter and bringing in a record $5.7 billion in sales.

In economic news, the government released its weekly petroleum inventory report to show that crude oil inventories dropped by 2.9 million barrels for the week ended Jan 6 to 318.7 million barrels, while gasoline inventiories rose by 4.5 million barrels.

Computer hardware stocks gained strength in the morning sending the sector up by 1.7%, leading a rally in most parts of technology. The semiconductor sector posted a gain of about 1%. Both sectors extended their 52-week highs.

The airline sector declined 1.4%, extendinding yesterday's losses and ticking to a new intraday low. SkyWest (SKYW: chart) was the sharpest decliner among the airlines, with a loss of 3.9%.

Apple (AAPL: chart) rallied to a new high Tuesday on the announcement of new products and preliminary quarterly revenue. The stock added to its gains on Wednesday, extending its peak with a 3% advance. Rambus (RMBS: chart) expanded the rally it began on a favorable legal ruling last week. Important key tech stocks, including Applied Materials (AMAT: chart), CIENA (CIEN: chart), Corning (GLA: chart) and Broadcom (BRCM: chart) climbed to fresh highs.

Among the very few noteworthy stocks moving to new lows, NitroMed (NTMD: chart) fell 5% to set a fresh low. Chesapeake Corp. (CSK: chart) and Hancock Fabrics (HKF: chart) set new lows as well.

In midday trading, the Dow Jones industrial average fell 7.76, or 0.07%. The Standard & Poor's 500 index rose 0.40, or 0.03%, and the Nasdaq composite index rose 1.42, or 0.06%.

Bonds were flat, with the yield on the 10-year Treasury note at 4.43%.

MOVERS AND SHAKERS

Yahoo Inc. (YHOO: chart) was downgraded by Merrill Lynch to neutral from buy, citing the recent appreciation of the company''s shares and its assessment of fair value at $46 to $48 a share However, the bank expects a strong Q4 in the sector, and, for Yahoo in particular. Yahoo’s shares declined 2.6%.

Caribou Coffee (CBOU: chart) said it expects to report a loss of 10-20 cents a share, with comparable coffeehouse sales to be in the range of 3 to 7%. Under a new license agreement, General Mills (GIS: chart) will use the Caribou Coffee marks and coffee in the production of gourmet coffee flavored products. The stock dropped 20.6%.

DuPont (DD: chart), chemical company, announced that its Q4 earnings would fall short of expectations, due to operations disruptions from hurricane''s Katrina and Rita, as well as weak performances in a number of its businesses. The Dow Component lowered Q4 profit to 10 cents a share from earlier projections of 20 to 25 cents a share, below estimates of 24 cents per share. The company’s shares fell 2.9%.

SanDisk Corp (SNDK: chart) was downgraded to neutral from overweight at J.P. Morgan, with the broker citing valuation. It believes Q4 results should meet or beat its above-consensus forecast for 70 cents in earnings per share on sales of $746 million. The stock dropped 3.1%.

ECONOMIC NEWS

Crude oil inventories showed a sharp decline in the latest week, according to government statistics released Wednesday, adding to the slide posted in the previous week. Stocks of gasoline and distillate fuel oil advanced during the period.

The Department of Energy''s Energy Information Administration revealed that crude oil inventories dropped by 2.9 million barrels for the week ended January 6, falling to 318.7 million barrels from the prior week''s level of 321.6 million barrels. This followed a decline of 1 million barrels in the previous week. Oil inventories were 11.4% higher than their levels of the same time last year.

Gasoline inventories posted a week-over-week increase of 4.5 million barrels, the government said, compared to the previous week''s increase of 1.4 million barrels. Gasoline stocks were 4.1% below their levels of last year. Inventories of distillate fuel oil rose by 4.9 million barrels in the most recent week.

INTERNATIONAL MARKETS NEWS