Wall Street finishes flat after late buying

US stocks erased losses in a late flurry of buying to end little changed yesterday as overall optimism about earnings offset disappointing results from blue chips 3M and Johnson & Johnson.

About 70 per cent of S&P companies so far have beaten estimates, but worries about inflation cutting into profits have caused investors to jump on shares of companies that only produce spectacular results.

Stocks were lower for most of yesterday’s trading. Shares of 3M fell 2 per cent to $88.50 after results barely topped estimates and the manufacturer warned rising raw material costs would pressure its bottom line.

Healthcare company J&J said US sales of consumer products fell sharply and forecast 2011 earnings below expectations, sending its shares down 2 per cent to $61.08.

American Express fell 2 per cent to $44.80 a day after reporting results. Investors were worried as it relies more on its processing business, which faces increased regulation.

“Today the market is simply a little tired and overbought,” said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville.

“But selling has been ineffective, including today; the benefit of the doubt has to go to the bullish case.”

The Dow Jones industrial average finished down 3.33 points, or 0.03 per cent, at 11,977.19. The Standard & Poor’s 500 Index was up 0.34 point, or 0.03 per cent, at 1,291.18. The Nasdaq Composite Index was up 1.70 points, or 0.06 per cent, at 2,719.25.

The S&P 500 index bounced off support at 1,280 in a sign of the market's resilience despite some disappointing earnings.

Trading volume was 7.97bn shares on the New York Stock Exchange, the American Stock Exchange and Nasdaq, down from last year’s estimated daily average of 8.47bn shares.

Investors will focus on US President Barack Obama’s State of the Union speech to Congress (0200 GMT today). His remarks could have an impact on energy, infrastructure and other market sectors. He is expected to challenge Republican proposals to cut the federal budget in a bid to slow the growth of US government debt.