The Dow fell 33.87 to close at 6,850.03, but would have shown a gain on the day of not for IBM's plunge. The loss snapped a string of four straight record closes for Dow, which yesterday nearly hit 6,900 for the first time.
Decline led advancers by a 10-to-9 margin on the New York Stock Exchange, with 1,215 up, 1,334 down and 797 unchanged. NYSE volume was 585.72 million shares vs. 571.27 million yesterday.
Broader measures turned mostly positive after some morning stumbles. Several indexes set new highs, including the fifth straight by the Standard & Poor's 500 list of larger companies, which rose 3.50 to close at 786.22.
Also setting records, the NYSE composite, up 1.23 to 412.80; the Nasdaq index, up 11.07 to 1,388.04; and the Russell 2000 list of smaller companies, up 0.33 to 370.65.
The American Stock Exchange index rose 0.93 to 590.87.
The focus of the day was International Business Machines Corp.'s seemingly impressive fourth-quarter results, reported after yesterday's close. The computer maker's stock tumbled more than 10 points, or the equivalent of about 30 Dow points, as the NYSE's most active issue. IBM's fourth-quarter profit grew 18.3 percent, beating many projections. But revenue growth failed to meet expectations and profit margins fell, prompting several leading brokerages to lower their investment ratings and earnings estimates.
With many technology leaders having rallied in anticipation of blockbuster results, investors have been betting on profits that beat projections by a wide margin. Satisfying such hopes was Compaq Computer, which reported today that its fourth-quarter earnings soared more than fivefold. The personal computer maker's shares jumped in active NYSE trading.
AT&T, meanwhile, reported a fourth-quarter profit that reversed a loss from a year earlier, but its results were held back by unpaid telephone bills and fell shy of analyst estimates. AT&T, a Dow component, fell on the NYSE.
The day's gains came despite pressure from the bond market, which gave up some early gains despite a Commerce Department report showing that housing starts plunged 12.2 percent in December to the lowest level in 18 months.
Bonds briefly moved higher again in the afternoon, sending interest rates lower, as the Federal Reserve reported that the economy was growing moderately in December and early January with little sign of inflation except for sharply rising energy costs.
But then Treasury prices turned lower, boosting lending rates, amid a flood of new securities from a government auction of $17.5 billion in new two-year Treasury notes.
As bonds fell today, the yield on the 30-year Treasury bond - a key determinant of corporate and consumer borrowing costs - rose from late Tuesday's 6.78 percent to 6.82 percent.