Bay Street failed to hold on to early gains Wednesday as technology stocks pulled Canadian markets into the red, while U.S. markets were plagued by mixed corporate results.

At close, the S&P/TSX was down 14.42 points or 0.16% to 9120.35, while the TSX Venture exchange lost 3.02 points or 0.17% to 1793.73. In New York, the Dow Jones industrial average slid 88.82 points or 0.84% to 10539.97. The Nasdaq lost 32.45 points or 1.54% to 2073.59 and the S&P 500 was off 11.35 points or 0.95% to 1184.63.

The Canadian dollar was down 0.24 of a cent to US81.45¢ in late trading as the December consumer price index suggested the Bank of Canada will leave interest rates alone next week. Statistics Canada reported that the annual inflation rate eased to 2.1% last month.

In Toronto, gold and mining stocks kept the TSX in the black until early afternoon. Gold shares finished ahead 0.33% as the spot price of gold was off slightly in New York and up slightly in London.

Technology shares lead the TSX lower. They were off 2.15% with Nortel Networks Corp. losing 4.77% to $3.79 on volume of more than 8.6 million shares.

Financial stocks were up 0.07%. The big banks seemed largely unphazed by comments Wednesday by bank CEOs that they don’t expect government approval for domestic bank mergers anytime soon. The executives were speaking at an investor conference in Toronto.

The heads of Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Canadian Imperial Bank of Commerce and Bank of Montreal were asked whether bank mergers will be allowed in the next one to two years. All except for Scotiabank’s Richard Waugh, who declined to forecast a timeline, agreed the prospect was unlikely.

Royal Bank shares lost 0.05% to $63.46, while TD Bank added 0.2% to $49.109, Scotiabank was unchanged at $39.80, CIBC fell 0.65% to $69.30 and BMO slid 0.94% to $55.67.

In New York, investors weighed strong economic numbers against mixed corporate results, including disappointing earnings from JPMorgan Chase & Co.

Overall, earnings have been somewhat better than expected, but the market’s reaction to good news has been muted, which some analysts attributed to growing anxiety over the prospect of higher interest rates. While economic numbers have been solid, the fact that inflation rose during 2004 at the fastest pace in four years only exacerbated rate concerns.

Inflation rose at the fastest pace since 2000 last year as a surge in fuel bills sent the Consumer Price Index climbing 3.3%, the Labor Department reported. Consumer prices rose just 1.9% in 2003. There could be some relief ahead, however; lower energy prices in December led to a 0.1% drop in retail prices.

In other economic news, the Commerce Department reported residential construction rose for a fourth straight year following a jump in construction of new homes in December. Separately, the Labor Department announced new claims for unemployment benefits fell last week by the largest amount in more than three years, easing concerns raised by layoffs over the previous two weeks.

On the earnings front, one of the biggest letdowns came from JPMorgan Chase & Co., which missed estimates, causing the entire banking sector to sag. JPMorgan Chase lost 1.46% to US$37.84 after saying its profits had fallen 11% in the fourth quarter.

The world’s biggest automaker, General Motors Corp., lost 0.16% to US$36.71 after reporting lower profits compared to the year-ago period, due in part to continuing struggles at its European operations.

Pfizer Inc., the world’s largest drug company, slid 1.66% to US$24.88 after reporting its net income more than quadrupled during the fourth quarter, driven by strong sales of cholesterol drug Lipitor. Earnings still missed analysts’ forecasts after charges.

International Business Machines Corp., which announced profits that beat expectations after the close Tuesday, was down 1.90% at $93.10. Revenues also topped forecasts, as IBM posted strong overseas sales on the back of a weak dollar. IBM’s outlook for 2005 was positive, but company officials said retirement expenses would be higher than expected due to the currency impact.