US STOCKS-Market near flat as Ambac outlook weighs

(Updates to midday, changes byline)

By Cal Mankowski

NEW YORK, April 23 (Reuters) - The Dow and S&P 500 were little changed on Wednesday as Ambac Financial Group Inc's (ABK.N: Quote, Profile, Research) stock slide on worries about the bond insurer's outlook offset stronger-than-expected profits from Boeing Co (BA.N: Quote, Profile, Research) and Philip Morris International Inc (PM.N: Quote, Profile, Research).

The Nasdaq clung to a modest advance as investors bet that Apple Inc (AAPL.O: Quote, Profile, Research) would post robust quarterly results after the close.

But financial shares declined 1.1 percent as investors fretted anew about the impact of the subprime mortgage fallout. Ambac (ABK.N: Quote, Profile, Research) plunged 40.1 percent to $3.57, its worst slide in more than three months, while shares of rival MBIA Inc (MBI.N: Quote, Profile, Research)dropped 29.4 percent to $9.36.

Earlier in the day, Ambac posted a wider-than-expected first-quarter loss. For details see [ID:nN23404196]

"Ambac lost more money than people thought," said Al Goldman, chief market strategist at Wachovia Securities in St. Louis. "That was kind of a shock to the system, but I think that is a worry that will be on the back burner soon."

Providing some support to stocks, Boeing said first-quarter profit was helped by higher deliveries of commercial planes, while Marlboro cigarette maker Philip Morris (PM.N: Quote, Profile, Research) raised its full-year earnings forecast, citing currency benefits. Shares of Boeing rose 5 percent to $82.52 while Philip Morris gained 2.6 percent to $51.37.

The Dow Jones industrial average .DJI was up 5.21 points, or 0.04 percent, at 12,725.44. The Standard & Poor's 500 Index .SPX was down 1.26 points, or 0.09 percent, at 1,374.68. The Nasdaq Composite Index .IXIC was up 13.96 points, or 0.59 percent, at 2,390.90.