Dow Closes Lower, Nasdaq Gains 2%

(Updated from 3:44 p.m. EDT)

After a strong session for most of the day, blue-chips sold off in late afternoon trading. Tech stocks continued to trade higher on the heels of an upgrade of several semiconductor companies.

The Dow lost 12.80 points, or 0.12%, to 10,510.01. The Nasdaq was up 41.25 points, or 2.03%, to 2068.38, and the S&P 500 climbed 4.85 points, or 0.40%, to 1216.08.

A weaker than expected Purchasing Managers' Index report combined with more reports of declining sales from auto manufacturers Ford(F) and General Motors(GM) are driving down many of the Dow components, according to Keith Keenan, vice president of institutional trading at Wall Street Access. Chatter about the Argentine debt crisis appears to be weighing on some stocks as well, Keenan added.

Lucent (LU) was the most active stock on the New York Stock Exchange, and lost 57 cents, or 8.51%, to $6.13. The battered telecom equipment maker said Tuesday that it hopes to raise $1 billion in cash through the private sale of convertible preferred stock. EMC (EMC) led a rally in storage stocks, trading up $1.18, or 5.98%, to $20.90.

Chips and Internet stocks had a strong session, whereas health care and biotech stocks sold off.

Chipmaker Intel(INTC) was up 94 cents, or 3.15%, to $30.75 following a research note from Merrill Lynch in which the firm upgraded a slew of semiconductor companies. Intel, however, wasn't on Merrill's list. Texas Instruments(TXN) traded up $2.13, or 6.17%, to $36.63 after being upgraded.

The 10-year benchmark Treasury note was recently down 4/32 to 99 14/32, yielding 5.075%. The dollar was weaker against the yen and the euro.

Overseas, European stocks traded slightly higher with most of the strength coming from the semis. London's FTSE 100 was up 18 points, or 0.32%, to 5547. In Japan, the Nikkei 225 was trading up nearly 100 points, or 0.83%, to 11,959. In Hong Kong, the Hang Seng was higher by 162 points, or 1.32%, to 12,479 as technology stocks provided a spark despite continued concerns over corporate earnings.

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