The Rally Rests

Updated from 4:04 p.m. EST

Stocks closed lower Thursday after a late-day earnings miss sent technology stocks deeper into the red, but the major averages still finished near their highest closing levels in about two years.

The Dow finished fractionally lower at 10,623.18 and the S&P 500 slipped 3.67 points, or 0.3%, to 1143.94, after both hit new 22-month highs Wednesday. The Nasdaq fell 23.44 points, or 1.1%, to 2119.01.

It's the first time in six weeks that the tech index has fallen in consecutive sessions. Since then the Nasdaq has risen more than 11%.

Volume on the New York Stock Exchange was 1.69 billion shares, while 2.3 billion shares changed hands on the Nasdaq. Advancers and decliners were close to even on the NYSE, while decliners beat advancers on the Nasdaq by about 3 to 2.

Ray Hawkins, a trader at J.P. Morgan Chase, said the Nasdaq's late slide was because of an earnings miss from Amgen (AMGN Quote), which accidentally released its results just before the close.

Trading was pretty directionless, with investors positioning for Microsoft (MSFT Quote) earnings after the bell, added Hawkins. "If you had some longs, it was a good time to get them squared up."

In economic reports, the government's initial jobless claims for the week ended Jan. 16 fell by 1,000 to 341,000, with economists expecting a slight rise; claims and the four-week moving average have now been below the key 400,000 level since the beginning of October 2003.

The Conference Board's leading economic indicators rose 0.2% in December, after a similar increase in the prior month, in-line with economist expectations.

Markets overseas closed mixed. In London, the FTSE 100 fell 0.8% to 4477, while Germany's Xetra DAX rose fractionally to 4140. Japan's Nikkei finished close to unchanged at 11,001 and Hong Kong's Hang Seng rallied 1.3% at 13,751.

The 10-year Treasury note rose 15/32, yielding 3.96%, as the dip in initial jobless claims failed to convince traders that job growth was at hand.

Elsewhere, the dollar was weaker vs. both the euro and Japanese yen. The euro was recently fetching $1.27, while the dollar was worth 106.03. The euro got a lift after the release of the European Central Bank's monthly report, which dismissed the notion that the central bank was on the verge of selling the currency or cutting interest rates.