Blue Chips Up, Tech Shares Down

Blue-chip stocks were slightly higher Tuesday after minutes from the last Federal Reserve meeting eased some concern about more aggressive interest-rate hikes and as IBM shares rose following its second Wall Street upgrade in two days.

The Nasdaq Composite Index (search), meanwhile, was pulled lower by semiconductor shares after a sales warning on Monday from Xilinx Inc. (XLNX). Xilinx fell 2.7 percent to $22.15.

Shares of International Business Machines Corp. (IBM) rose 2.2 percent to $83 on the New York Stock Exchange after Credit Suisse First Boston raised its investment rating on IBM and increased its price target to $95. Citigroup upgraded IBM on Monday.

The Dow Jones industrial average (search) was up 5 points, or 0.05 percent, at 10,244.05. The Standard & Poor's 500 Index (search) was down 3.59 points, or 0.30 percent, at 1,183.74. The technology-laced Nasdaq Composite Index was down 20 points, or 0.96 percent, at 2,058.88.

The policy-setting Federal Open Market Committee (search) raised the fed funds rate by a quarter-percentage point on Sept. 20.

"A pause in policy tightening at this meeting had the potential to mislead the public both about the committee's perceptions of the fundamental strength and resilience of the economy and about its commitment to fostering price stability," minutes from Fed policy-makers' September meeting released Tuesday afternoon said.

Investors were relieved that the Fed will keep to its pledge of raising interest rates at a "measured pace."

"It was a more dovish comment than we've heard in a long time," said Mike O'Hare, head of listed trading at Lehman Brothers. "I think people are perceiving that the worst is baked in. But it's inevitable that we're going to have more rate hikes."

Alcoa (AA) shares rose 1.3 percent to $22.96 after the aluminum maker posted better-than-expected results on Monday.

RealNetworks Inc. (RNWK) jumped 34 percent to $7.68 on Nasdaq after Microsoft Corp. (MSFT)said it would pay $761 million to settle an antitrust dispute with the Internet media software company. Microsoft shares dipped 0.3 percent to $24.40.

SigmaTel Inc., which supplies memory chips for Apple iPod Shuffles, dropped 20 percent to $13.78 on Nasdaq after a profit warning Monday.

Apple Computer Inc. (AAPL), up 1.7 percent at $51.20, will report earnings after the bell.

"There's not a whole lot of tolerance for growth stories, speculative stories," said Stephen Massocca, head of trading and president of Pacific Growth Equities, a San Francisco-based investment bank.

Rising oil prices also may have discouraged some investors from loading up on stocks. U.S. crude oil for November delivery surged $1.73 to settle at $63.53 a barrel.