Wall Street eases on IBM, Intel; Chesapeake slumps

International Business Machines Corp and Intel Corp were the biggest drags on the Dow. IBM missed its revenue forecast, while investors said Intel's results failed to make a bull case for the stock.

The lackluster reports from the two technology heavyweights came at the start of what has been a strong earnings season. The S&P 500 had its best day in a month on Tuesday as Coca-Cola Co led the day's round of solid earnings and as concerns eased over the euro zone debt crisis.

Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Nashville, Tennessee, expects the market to continue its back-and-forth, possibly trending lower in the second quarter after strong gains earlier in the year.

A consolidation or correction phase in the second quarter would make the most sense, and probably it would be the most healthy thing for the market, he said.

Market breadth was worse than the relatively slight losses suggested in the late morning. On the New York Stock Exchange, two stocks declined for every one that rose.

Chesapeake Energy Corp slumped nearly 9 percent to $17.40 after Reuters reported that CEO Aubrey K. McClendon did not disclose loans of as much as $1.1 billion over the last three years against his stake in thousands of company oil and natural gas wells.

Chesapeake was the most actively traded stock on the NYSE, outstripping even Bank of America with its massive share float.

I think where there is smoke, there may be fire, and investors are still in a shoot-first mentality, said David Lutz, a trader a Stifel Nicolaus in Baltimore.

The Dow Jones industrial average <.DJI> dropped 71.18 points, or 0.54 percent, at 13,044.36. The Standard & Poor's 500 Index <.SPX> was down 6.80 points, or 0.49 percent, at 1,383.98. The Nasdaq Composite Index <.IXIC> was off 17.60 points, or 0.58 percent, at 3,025.22.

IBM lost 2.5 percent to $202.32 and Intel fell 1.7 percent to $27.98. The PHLX semiconductor index <.SOX> declined 1.2 percent.

According to Thomson Reuters data, 22 companies in the S&P 500 were expected to report on Wednesday, including American Express Co , Qualcomm Inc and eBay Inc after the close.

Of the 56 S&P 500 companies reporting through Wednesday morning, 79 percent beat Wall Street estimates.

Investors should not overreact to positive news nor should they be overreacting to really what could be viewed as isolated earnings reports. One report does not make a trend, unfortunately, said Tim Speiss, a partner at Eisner Amper in New York.

Yahoo Inc gained 3.1 percent to $15.47 after quarterly revenues rose in the first quarterly sales growth in three years, as the new CEO outlined plans to revamp the struggling Internet media company.

Halliburton Co advanced 4.2 percent to $34.02 after the world's No. 2 oilfield services company said North American revenue reached a record high. The PHLX oil service sector <.OSX> gained 1.1 percent.

SXC Health Solutions Corp will buy pharmacy benefit manager Catalyst Health Solutions Inc for about $4.4 billion. Catalyst jumped 31.2 percent to $83.43 and U.S.-listed shares of SXC Health climbed 8 percent to $86.74.

Genworth Financial Inc slid 22 percent to $6 and was the worst S&P 500 performer after the life and mortgage insurer pushed back the initial public offering of an Australian unit.

Berkshire Hathaway Inc's Warren Buffett said he has stage 1 prostate cancer that is not remotely life-threatening or even debilitating in any meaningful way. Berkshire Class B shares lost 1.2 percent to $79.78.

(Reporting By Edward Krudy; editing by Jeffrey Benkoe)