Updated from 4:04 p.m. EST
Blue-chips managed to close slightly higher Wednesday, rebounding modestly from a pullback that seemed to have begun after rumors circulated that a big research firm was preparing to issue negative remarks on chip giant
Tech stocks, unable to turn around after sliding into negative territory in afternoon trading, ended lower.
Earlier Wednesday, the major averages were broadly higher following optimistic comments from
Federal Reserve Chairman Alan Greenspan and a government report that showed surprising strength in the manufacturing sector. But most of the gains wouldn't hold.
Dow Jones Industrial Average finished with a gain of 12.32 points, or 0.1%, to 10,127.58, and the
Nasdaq lost 15 points, or 0.9%, to 1751.86. The
S&P 500 tacked on half a point to 1109.88.
Before the gains disappeared, the averages were lifted after the Commerce Department said durable goods orders rose 2.6% in January, easily beating the 1.3% consensus estimate. It was the third increase in the last four months and reflected higher demand for cars, planes and computers.
They got another boost when Greenspan told the House Financial Services Committee that he sees more signs the economy is improving, albeit slowly. Greenspan said the Fed expects the economy to grow by between 2.5% and 3% this year, which would be a relatively subdued rate following a recession.
Also supporting stocks Wednesday morning was a decision by
Salomon Smith Barney
to raise the equity allocation in the model portfolio it recommends to brokerage clients. The firm raised stocks to 75% from 70% and lowered the recommended percentage of bond holdings to 20% from 25%.
By the afternoon, little of that seemed to matter as the indices gave back the session's gains.
In corporate news,
shares were skyrocketing on reports that the Food and Drug Administration might not require it to conduct new large-scale trials on its cancer drug Erbitux. The FDA previously refused to review the application on grounds it was incomplete but reportedly told ImClone and partner
that it would be willing to accept the application if data from European studies was updated and included. ImClone closed up 32% to $20.53.
Going in the other direction was
, which last night reported a 4-cent fourth-quarter loss, set a billion-dollar bond sale and shuffled management at its flagship division. The company said little in a conference call to quell investors' concerns about its liquidity and turnaround prospects, and the shares traded down 8.5% to $12.40. Gap was the most active stock on the
New York Stock Exchange.
On the Nasdaq,
was by far the top volume mover, and the stock lost 8% at $14.24.
dropped a day after the company posted a wider-than-expected fourth-quarter loss. The company also said it will take a pretax charge of about $15 billion to $25 billion to reflect changes in accounting regulations for goodwill and intangible assets. The stock was off $2.09, or 4.3%, at $47.
Retail pharmacy chain
was a big winner, jumping 15% to $3.03, after the company announced a restructuring of its credit facility and reaffirmed its fourth-quarter guidance.
Overseas, equities were higher. The London FTSE 100 was up 0.8% at 5178, and Germany's Xetra Dax was ahead by 1.3% to 4960. Japan's Nikkei gained 3.6% to 10,573, and Hong Kong's Hang Seng added 1% to 10,649.
U.S. Treasuries were higher. The 10-year was recently trading up 11/32 to 99 30/32, yielding 4.88%.