* Apple shares fall in volatile trading
* Merck on track for its best day since January 2014
* Feb U.S. single-family home prices rise
* Dow up 0.3 pct, S&P up 0.2 pct, Nasdaq down 0.04 pct (Updates to late afternoon)
By Caroline Valetkevitch
April 28 (Reuters) - The Dow and S&P 500 inched higher on Tuesday afternoon, helped by strong earnings from Merck and gains in IBM after it boosted its dividend.
IBM shares rose 1.9 percent to $174.04, breaking above the stock's 200-day moving average and giving the Dow its biggest boost. The company hiked its quarterly dividend by 18 percent, the biggest increase in five years.
Merck jumped 5.3 percent to $60.11, on track for its best day since January 2014, after reporting better-than-expected results and releasing favorable data late Monday about the safety of its Januvia diabetes drug.
Apple kept trading volatile as it swung between gains and losses a day after reporting results. The stock hit a record high in early trading but shares were last down 1.5 percent at $130.63, weighing on the Nasdaq.
"We're continuing to essentially tread water. Apple's numbers were phenomenal but yet the stock is down. Why is that? I think people were expecting a blowout quarter ... so it's kind of a sell-the-news situation," said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
U.S. first-quarter earnings are now on track to post a slight gain after stronger-than-expected results from companies such as Apple, defying forecasts for the first profit decline since 2009, Thomson Reuters data showed.
At 2:36 p.m., the Dow Jones industrial average rose 48.31 points, or 0.27 percent, to 18,086.28, the S&P 500 gained 4.07 points, or 0.19 percent, to 2,112.99 and the Nasdaq Composite dropped 2.03 points, or 0.04 percent, to 5,058.22.
Adding to the positive tone, U.S. single-family home prices rose more than expected in February from a year earlier, according to a survey.
adding to the volatility in the stock market: Iranian Revolutionary Guards forces boarded a Marshall Islands-flagged cargo ship in the Gulf, U.S. officials said. That spurred a brief rally in oil prices.
Investors are awaiting the results of a two-day Federal Reserve meeting that ends on Wednesday for clues on when the central bank will hike interest rates.
Whirlpool fell 6.5 percent to $184.96 after cutting its 2015 profit and sales forecast, blaming the strong dollar and Brazil's stagnating economy.
Advancing issues outnumbered declining ones on the NYSE by 1,823 to 1,164, for a 1.57-to-1 ratio; on the Nasdaq, 1,624 issues rose and 1,076 fell, for a 1.51-to-1 ratio favoring advancers.
The S&P 500 index was posting 9 new 52-week highs and no new lows; the Nasdaq Composite was recording 55 new highs and 36 new lows. (Editing by Savio D'Souza and Nick Zieminski)