Stocks Finish Mixed After Tuesday's Rally

A terrorism warning and mixed economic data kept a lid on the market's move up.
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Updated from 4:11 p.m. EDT

Stocks closed mixed Thursday with tech issues posting a modest advance, as investors returned to their recent tentativeness and concerns about rising oil prices and geopolitical fallout.

The

Dow Jones Industrial Average

shed 7.73 points, or 0.08%, to 10,109.89; the

S&P 500

gained 1.90 points, or 0.17%, to 1114.95; and the

Nasdaq Composite

set a new high for the month, up 11.50 points, or 0.59%, to 1976.15.

The 10-year Treasury note traded up 15/32 in price to yield 4.66%, while the dollar went higher than the yen and lower than the euro.

Volume was moderate while breadth was a victory for buyers. Nearly 1.4 billion shares traded on the

New York Stock Exchange

, and advancers outpaced decliners by about 2 to 1. On the Nasdaq, almost 1.6 billion shares changed hands, and advancers beat decliners by about 3 to 2.

Investors momentarily took stocks to their highest levels of the day after U.S. Attorney General John Ashcroft spoke at a news conference to explain the government's evidence that al Qaeda is planning attacks in the U.S., possibly this summer. He gave no specific information about potential plots, but said they could be targeting events like the political conventions or the upcoming international economic summit.

"This news has been out all day, really, and I think we trade in an environment now where any major holiday or major activity in the U.S. is a target for terrorists, so that's nothing new to the market," said Steve Kolano, assistant vice president of equity trading with Boston Company Asset Management. "I think the stock market has pulled back lately on bad news, like Iraq and rising energy prices, and now that we've got it factored in, people can focus on the positive and buy up some deals here.

"The market is looking at economic strength and job creation," Kolano added. "Interest rates are rising because of these positive developments out there."

The price of oil continued to slip from the record highs set earlier in the week in London and on the New York Mercantile Exchange. The Energy Department reported a drop in gasoline supplies, while crude-oil stocks were unchanged for the last week. Nymex crude for July delivery settled down 44 cents at $40.70 a barrel.

"The market is trying to consolidate yesterday's gains, and the reason for that is not so much the sour economic data, but it's more that we're coming up on a long weekend and the talk of terrorism has put the market basically on hold," said Peter Cardillo, chief market analyst at S.W. Bach & Co. "I think the market is acting pretty well after yesterday's rally. It shows that investors are not willing to take big profits off the table."

On Tuesday, stocks were able to put oil and geopolitics in the rearview for a day, allowing both the Dow and Nasdaq to close above their 200-day moving averages for the first time in nearly three weeks. The Dow added 159 points to 10,117.6 and the Nasdaq closed up 42 points to 1964.7. The rally came on volume that was light but well above the previous three sessions, with about 1.5 billion shares traded on the New York Stock Exchange.

"It's very possible that we have a short-term bottom in place now," said Richard Williams, chief market technician with Garban Institutional Equities. "Because of a lack of momentum and volume, it doesn't feel to me to be a robust-enough bottom to be the platform off which to make new highs. Looking in the longer term, I think it's more likely that we'll attempt the highs but probably fall short."

"I think you have to be cautiously bullish at the moment and try and pick up some buying opportunities as the indices bounce off these support levels," Williams added.

Durable goods orders to U.S. manufacturers dropped 2.9% in April, according to a government report, well past Wall Street's consensus estimate that called for only a 0.9% dip. Orders in March were revised up to a jump of 5.7% from the previously reported 3.4%.

Also, on the economic front, new-home sales dropped more than expected in April to an annualized 1.093 million, down from a revised 1.239 million in March.

Among stocks Wednesday, shares of

Boeing

(BA) - Get Report

gained 6 cents, or 0.1%, to $44.76 after Defense Secretary Donald Rumsfeld delayed a decision on how to modernize the military's aerial refueling fleet, jeopardizing a $23.5 billion deal with the company.

Comcast

(CMCSA) - Get Report

garnered attention after

The Wall Street Journal

reported that the cable giant plans to offer phone service to about 40 million households by the end of 2006. Such a move would be a significant development in the growing battle between cable and phone companies as they expand their networks with plans to offer each other's products. Its shares closed up 12 cents, or 0.4%, to $29.69.

TiVo

(TIVO) - Get Report

reported a first-quarter loss after the bell Tuesday, but its results beat estimates, sending its stock up 16%. The company reported a loss of $9.1 million, or 11 cents a share, compared with the Thomson First Call estimate of a 20-cent loss. The company reported a loss of $7.9 million, or 12 cents a share, in the same quarter last year. Its shares closed up 43 cents, or 5.7%, to $7.99.

Auto-parts retailer

Autozone

(AZO) - Get Report

said third-quarter earnings were $143.4 million, or $1.68 a share, compared with $126 million, or $1.30 a share, last year. Sales rose 5.6% to $1.36 billion in the quarter. On an adjusted basis, third-quarter earnings were $1.61 a share. On that basis, analysts were looking for earnings of $1.55 a share on revenue of $1.36 billion. Its shares climbed 41 cents, or 0.5%, to $83.79.

Homebuilder

Toll Brothers

(TOL) - Get Report

reported second-quarter earnings of $72.4 million, or 89 cents a share, compared with $52.9 million, or 72 cents a share, last year. Analysts had been expecting earnings of 88 cents a share in the latest quarter. Revenue rose 34.8% to $819.5 million, about $28 million better than forecast. Its shares closed down 90 cents, or 2.2%, to $40.50.

Overseas markets climbed, with London's FTSE closing up 0.5% to 4438 and Germany's Xetra DAX gaining 1% to 3867. In Asia, Japan's Nikkei rose 1.7% to 11,152, and the Hang Seng in Hong Kong added 0.2% to 11,692.

At 8:30 a.m. EDT on Thursday, the government is expected to report that the U.S. economy grew at an annualized rate of 4.5% in the first quarter, up from the advance figure of 4.2% given in April. In the fourth quarter of 2003, the economy expanded at an annual rate of 4.1%.

Also, the Labor Department will release data on initial employment claims from the week ended May 22, and are expected to dip from the previous week's 345,000 to 335,000.

At 10 a.m. EDT, the Conference Board is expected to report that its help-wanted index rose to 41 from 39 in April.

Before the bell, earnings results are due out from discount retail chains

Costco

(COST) - Get Report

and

Dollar General

(DG) - Get Report

.