Initially, IBM's outlook came as a blow to investors who had hoped that companies would post respectable first-quarter results and offer upbeat forecasts. But analysts said the market rebounded as investors first decided IBM's troubles were not industry-wide and then were enticed by the market's lower prices following three weeks of strong selling.

The Dow Jones industrial average closed down 22.56, or 0.2 percent, at 10,249.08, rebounding from an earlier loss of 150.01, according to preliminary calculations. The bulk of the Dow's decline was due to IBM.

The broader market finished higher. The tech-dominated Nasdaq composite index rose 15.75, or 0.9 percent, to 1,785.78, recovering from a loss of 36.19 earlier in the day. Analysts attributed lower prices for Nasdaq issues for the modest upturn. The Nasdaq fell 1.8 percent last week and to a yearly loss of 9.2 percent.

The Standard & Poor's 500 index, the broadest measure of stocks, advanced 2.56, or 0.2 percent, to 1,125.29.

The Dow's biggest loser was IBM, which fell $9.84 to $87.41 after lowering its first-quarter earnings and revenue estimates.

Analysts said IBM's warning wasn't entirely a surprise, which was why most of the market's decline was confined to IBM by afternoon. Rumors of the warning hit Wall Street Friday, but many analysts and professional investors had been expecting it for several quarters, said John C. Forelli, portfolio manager for Independence Investment LLC in Boston. Forelli noted that IBM had a history of modest revenue but double-digit profits that could not be sustained.

"Eventually, you have to figure that will run out," Forelli said.

Citing a difficult business climate, IBM now expects first-quarter earnings to be 66 cents to 70 cents a share, below the 85 cents Wall Street anticipated.

"The business environment remains very tough. We saw a continued slowdown in customer buying decisions in the first quarter," said John R. Joyce, IBM senior vice president and chief financial officer, in a news release.

But other tech companies advanced after saying business was turning around.

Intuit climbed $2.77 to $40.07 after the maker of tax software raised its fiscal third-quarter forecast. Computer Associates, which makes software for Web businesses, gained 83 cents to $20.73 after saying its fiscal fourth-quarter loss will be smaller than previously expected.

"The economy has clearly turned the corner. ... Typically, it takes some time for earnings to catch up," said Charles G. Crane, strategist for Victory SBSF Capital Management.

Overall, the market was mixed between slim gains and modest losses, which analysts mostly attributed to investors trying to determine what represented a good value on Wall Street.

Merck fell $1.09 to $54.16, but 3M, which raised its first-quarter outlook Friday, advanced $1.70 to $123.63.

Investors have unloaded shares for three weeks amid concerns about first-quarter results, which companies are in the process of releasing, and fears that conflict in the Middle East could disrupt oil production and lead to higher prices.

Iraq announced today it was suspending oil exports for one month, which explained why oil stocks advanced. ExxonMobil rose 61 cents to $43.24.