Late Rally Lifts Dow, but Nasdaq Slips

On the data side, the University of Michigan's April consumer-confidence reading was revised slightly downward to 62.6 in April, a dismal level not seen since the early 1980s. That's about 7 points lower than March. The survey found that 9 out of 10 American consumers believe the U.S. is already in recession.

Still, said Peter Morici, a business professor at the University of Maryland and former director of economics at the U.S. Trade Commission, "My feeling is that this data is not unexpected."

"Economists have a lot of trouble with sentiment data," Morici added. "It's harder to predict that translating into actual purchases and sales. My feeling is, someone drives past the gas pump and you call the guy up and ask how he feels, and he says he feels bad. So it's not that big a deal."

Separately, President Bush announced that the federal government's tax-rebate checks will begin shipping out Monday, a week ahead of schedule. The cash is intended to help stimulate the sluggish U.S. economy by giving strapped consumers extra spending money.

As for corporate news, shares of Microsoft, a Dow component, sagged 6.4% after the software giant offered fiscal fourth-quarter profit guidance that leans to the lower end of analyst targets, even as it projected more robust numbers for fiscal 2009 and bested last quarter's expectations.

Disk-drive maker Western Digital (WDC Quote) beat top- and bottom-line analyst views for the fiscal third quarter, and issued in-line profit guidance for the next, but also said a bigger-than-expected decline in demand for its products should weigh on current-quarter sales. Revenue was projected at $1.825 billion to $1.9 billion, the midpoint of which is a bit below the Wall Street consensus. Shares were tumbling 8.6%.