The yield-curve inversion - when the yield on a two-year note is higher than the yield on the 10-year note - steepened today, but this is not big news; it was when it happened several weeks ago. It was commonly believed that this occurrence could signal an economic slowdown, or even recession, as it has in the past. But most economists today, including Alan Greenspan and Ben Bernanke, do not believe that scenario will play out at this time due to strength in the economy.

The only news today came from the Mortgage Bankers Association, which reported a decline in mortgage applications for the week ended March 17. Applications to purchase fell 2.3 percent, while refis edged down 0.6 percent. This left the application index well below levels of one year ago.

Dow moves up smartly, Nasdaq lags

The Dow Jones industrials headed into positive territory at opening, boosted by news that GM had cut a deal with Delphi, its parts supplier, and the UAW regarding worker compensation. Shares of the automaker roared ahead but lost steam during the day and closed nearly flat. The news, however, set a positive tone, and the Dow closed with a big gain. On the other hand, Microsoft pressured the Nasdaq with the announcement that it would delay the introduction of its new operating system, Windows Vista, until early 2007. This sent not only Microsoft shares down, but also those of computer manufacturers, which may be negatively impacted by the delay.

Strong earnings from Morgan Stanley that beat estimates sent its shares up and boosted those of Goldman Sachs and Bear Stearns - brokerages that recently reported bullish numbers. And Bristol-Myers and Sanofi-Aventis each gained nearly 10 percent after settling a patent dispute with a Canadian company surrounding Plavix - a blood-thinning drug.

The Dow closed near a six-year high, led by Caterpillar with a 2.8 percent increase. Other big gainers included JP Morgan Chase, which was up 2 percent, and 3M, which added 1.5 percent. Verizon, Altria, Intel and United Technologies each contributed 1-percent increases. Only six components closed negative, led by Microsoft, which shed more than 2 percent. Disney dropped 1 percent, but other losses were small.

The Nasdaq composite struggled all morning due to the Microsoft news, but it broke into positive territory at noon and closed up -- just over 2,300. Although Microsoft never recovered, some big-cap techs did well on the session. Oracle, which was punished yesterday for disappointing the street with its earnings, closed up 2.7 percent, while Ericsson and Yahoo! each hit the 2-percent mark in gains. Even Sun Microsystems added 1.9 percent.

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