Updated from 4:04 p.m. EDT

Stocks ended with modest gains Thursday but weaker than-expected economic data limited some of the enthusiasm ahead of

Dell's

(DELL) - Get Report

earnings report.

The

Dow Jones Industrial Average finished with a gain of 45.53 points, or 0.4%, to 10,289.21. The

Nasdaq gained 4.88 points, or 0.3%, at 1730.44, and the

S&P 500 added 7.16 points, or 0.7%, to 1098.23.

Dell reported earnings after the close and beat first-quarter expectations by a penny. The PC maker earned 17 cents a share in the quarter, matching the bottom line in the year-ago period and topping analysts' estimates of 16 cents.

Elsewhere in the technology sector,

IBM

(IBM) - Get Report

Chief Executive Sam Palmisano told analysts Wednesday that while the company is dealing with challenging operational issues, he still sees double-digit profit growth over the long term. Palmisano also said that he expects to cut costs by $1 billion to $2 billion a year, an effort that will probably involve trimming its workforce by about 3%. Shares of IBM gained 1.1% to $85.45.

On the economic front, the Labor Department said

initial jobless claims rose to 418,000 in the week ended May 11 from a revised 416,000 the previous week. Economists were expecting the number of first-time claims for unemployment insurance to come in at 402,000, according to

Reuters

.

Separately, the Commerce Department issued its latest report on the housing market, which revealed a decrease in the number of privately owned housing units started.

Housing starts fell to 1.555 million in April from 1.644 million in March. The number of building permits issued rose to 1.634 million from 1.629 million the previous month.

In the retail sector, women's clothing merchant

AnnTaylor

(ANN)

said quarterly profits almost doubled due to strong sales of its full-price items. The company posted first-quarter earnings of $20.9 million, or 67 cents a share, up from $10.9 million, or 37 cents a share, in the same period last year.

Dillard's

(DDS) - Get Report

said its quarterly net income nearly doubled as well thanks to the department store chain's cost-cutting measures and higher-margin private-label sales. The company said it earned $58 million, or 68 cents a share, in the first quarter, compared with $29 million, or 34 cents a share last year. AnnTaylor traded higher by 0.4%, while Dillard's jumped 8%.

Lands' End

(LE) - Get Report

which recently agreed to be taken over by

Sears

(S) - Get Report

, beat Wall Street's first-quarter earnings expectations as profits rose sharply due to better supply prices and fewer markdowns. And teen clothier

American Eagle Outfitters

( AEOS) said first-quarter earnings fell 18% as higher costs offset higher sales, but it still managed to beat expectations by a penny.

Both Lands' End and American Eagle closed slightly higher. The biggest mover in retail was

Aeropostale

(ARO)

, which soared 54% to $27.75 in its debut on the

New York Stock Exchange.

Switching gears,

Brocade

(BRCD)

, a maker of data storage equipment, reported a 17% rise in second-quarter profits and predicted further earnings growth based on its new line of high-speed switches. The company forecast that sales would increase to $145 million to $150 million in the third quarter and $160 million to $165 million in the fourth quarter, compared with its second-quarter mark of $135 million. Brocade was down 3% at $22.75.

ImClone Systems

(IMCL)

was diving on word that its German partner, Merck KGaA, doesn't plan to expand a trial of proposed cancer treatment Erbitux. Shareholders of ImClone and

Bristol-Myers

(BMY) - Get Report

had been hoping an expanded European trial would help get the treatment cleared in the U.S. ImClone also said its quarterly earnings fell well short of analysts' expectations due to higher research and development expenditures. Shares lost 13% to $13.06.

Meanwhile,

NPS Pharmaceuticals

(NPSP)

dropped 28% to $22.72 after Merrill Lynch lowered its investment rating on the stock. Merrill downgraded the stock to a near-term buy rating from a strong buy, rating citing concerns over its osteoporosis treatment. In other research news, J.P. Morgan Chase upgraded drugmaker

Schering-Plough

( SGP) to long-term buy from market perform.

The energy traders remained in the news, as

CMS Energy

(CMS) - Get Report

said $4.4 billion of its electricity trading volume in 2000 and 2001 was the result of "round-trip" transactions that had no real economic value. The disclosure is the latest to call into question the credibility of the U.S. energy markets.

All of the transactions, in which the same amount of power was exchanged at the same price between two participants, were conducted with

Dynegy

(DYN)

and

Reliant Resources

(REI) - Get Report

. CMS was down 11% to $15.25.

U.S. Treasury issues rallied on the weak economic reports. Around 4 p.m. EDT, the 10-year note was rising 15/32 at 97 22/32, yielding 5.18%. The 30-year was the strongest issue.

European markets were mostly lower. London's FTSE 100 slipped 0.2% to 5249, and Germany's Xetra DAX was off 0.5% to 5047. In Asia, Japan's Nikkei 225 rose 0.8% to 11,739, while Hong Kong's Hang Seng finished down 0.1% to 11,833.