* Morgan Stanley rises as profit surges
* IBM drops on bigger-than-expected revenue decline
* Dow down 0.25 pct, S&P up 0.17 pct, Nasdaq up 0.58 pct (Updates to early afternoon)
By Yashaswini Swamynathan
April 19 Gains in technology and financial stocks propped up the S&P 500 and the Nasdaq on Wednesday, while a slump in IBM held back the Dow.
The advance in financials was underpinned by a 2.6 percent rise in Morgan Stanley, which reported a surge in quarterly profit. Shares of other big U.S. banks rose in tandem.
Morgan Stanley's solid results provided some succor to investors stung by weak results at chief rival Goldman Sachs a day earlier.
IBM sank nearly 5 percent to $161.61 after the company reported a bigger-than-expected decline in revenue for the first time in five quarters. The stock was the biggest drag on the Dow and the S&P.
"It's really a battle between geopolitical headlines and earnings right now, and for the most part earnings seem to be winning in the short term," said Jeff Zipper, managing director of investments at the Private Client Reserve of U.S. Bank in Palm Beach Florida.
Mounting tension between North Korea and the United States and political uncertainty in Europe ahead of the French presidential elections had kept safe-havens such as gold and U.S. Treasuries in demand in the past weeks.
At 12:35 p.m. ET (1635 GMT), the Dow Jones Industrial Average was down 51.28 points, or 0.25 percent, at 20,472, the S&P 500 was up 4.09 points, or 0.17 percent, at 2,346.28 and the Nasdaq Composite was up 34.20 points, or 0.58 percent, at 5,883.68.
With Wall Street near record levels and worries over President Donald Trump's ability to carry out his pro-growth promises, investors are hoping first-quarter earnings will be strong enough to justify pricey market valuations.
So far, the results have been promising. Of the 57 S&P 500 companies that have released results, more than 75 percent have topped earnings estimates, according to Thomson Reuters I/B/E/S.
Overall profits of S&P 500 companies are estimated to have risen 10.8 percent in the quarter - the best since 2011.
Seven of the 11 major S&P 500 sectors were higher.
Utilities, real estate, consumer staples and telecom services - defensive plays that have outperformed the broader index since Monday, were down.
Facebook was up 1.3 percent and provided the biggest boost to the S&P and the Nasdaq.
Intuitive Surgical was up 7.3 percent at $814.49 after the company reported higher-than-expected first-quarter revenue and profit.
American Express, eBay and Qualcomm are scheduled to report results after the market closes.
The Federal Reserve is expected to release its Beige Book, which will give a glimpse into economic conditions across the United States, at 2:00 p.m. ET.
Advancing issues outnumbered decliners on the NYSE by 1,667 to 1,155. On the Nasdaq, 1,904 issues rose and 837 fell.
The S&P 500 index showed 19 52-week highs and one low, while the Nasdaq recorded 73 highs and 26 lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Saumyadeb Chakrabarty)
UPDATE 1-Corruption charges against Brazil's Temer expected to come in waves -source
June 23 Brazil's top federal prosecutor will level corruption charges against President Michel Temer one at a time instead of making all the accusations at once, a strategy aimed at weakening his defense, a source with direct knowledge of the process told Reuters on Friday.
INSIGHT-Under pressure, Western tech firms bow to Russian demands to share cyber secrets
WASHINGTON/MOSCOW, June 23 Western technology companies, including Cisco, IBM and SAP , are acceding to demands by Moscow for access to closely guarded product security secrets, at a time when Russia has been accused of a growing number of cyber attacks on the West, a Reuters investigation has found.