Updated from 3:00 p.m.

Stocks eked out small gains on Wednesday, in a quiet session ahead of the Thanksgiving holiday, as the market was slow to react to stronger-than-expected economic data.

The

Dow Jones Industrial Average

rose 15.63 points, or 0.2%, to 9779.57, the

S&P 500

climbed 4.56 points, or 0.4%, to 1058.45 and the

Nasdaq Composite

gained 10.27 points, or 0.5%, to 1953.31.

Volume was extremely light; 1.11 billion shares traded on the

New York Stock Exchange

, while 1.51 billion shares exchanged hands on the Nasdaq. Advancers outpaced decliners on the NYSE at about 2 to 1, and on the Nasdaq at about 9 to 7.

"Market activity is fairly typical of a holiday week," said Brian Pears, head of equity trading at Victory Capital Management. "It is very quiet; most of the trading is dominated by hedge funds that will trade all the time, and not large institutions, which will usually wait for significant indicators or large market moves."

Initial jobless claims fell by 11,000 to 351,000 in the week ending Nov. 22, ahead of the consensus expectation of 361,000 and the lowest level in almost three years. Claims and the four-week moving average, which reduces volatility, have now spent eight consecutive weeks below the key 400,000 level necessary for labor market improvement.

Durable goods surged 3.3% in October, after a revised 2.1% increase last month. Economists had expected orders to rise by only 0.7%. October personal income climbed 0.4%, and personal spending was unchanged, in line with expectations.

The Chicago Purchasing Managers Index hit a nine-year high of 64.1 in November, well above its 55.0 reading a month ago and economists' expectations of 56.3. It will be interesting to see if local strength translates to national strength when the Institute for Supply Management's manufacturing index is released next week.

The

Federal Reserve's

Beige Book characterized improvements in the economy as "reasonably broad based." In addition, the report highlighted improving trends in the labor market, rising manufacturing activity and said the outlook for the upcoming holiday shopping season was "generally positive."

"Today's economic releases made for good headlines but are really not very significant from a trading perspective," said Pears. "In particular, durable goods is one of the most volatile indicators, and despite the big surprise is not likely to move the markets."

For the past two days, the equity markets have largely ignored a string of stronger-than-expected economic releases and have basically traded sideways. Some analysts have pointed out that this is a typical holiday trading pattern, while others contend that Tuesday's activity indicates that strong fundamentals (i.e., strong economic growth and corporate earnings) are already priced in and stocks are likely to remain range-bound until the fourth-quarter earnings season begins in January.

Along with a number of fundamental analysts who say stocks are well-priced, several technical analysts think stocks have already peaked for the year, and at least one technician is nervous that there could be a sharp pullback.

"The main indexes have established their highs for 2003," wrote Steven Miley, technical analyst for Merrill Lynch, in a note to clients. "This week's rebound has eased the immediate risk that the consolidation will be defensive in nature. Nevertheless, we do expect further erratic, nontrend activity over the holiday period and into early December."

Nora McAuley-Gitin, a technical analyst at Morgan Stanley, is more bearish. "We stand by our position that strength here is temporary and seasonal," she said in a research report Wednesday. "If any of these economic numbers should disappoint, the resulting sell-off could be sharp and nasty."

Pears points out that even if the major averages remain stable, individual sectors could be extremely volatile. "Given this year's strong double-digit gains, I would expect investors to move out of the best performing sectors, including technology and biotech, and into more stable ones," he said. "If the year's returns were closer to average, investors would be more likely to lock in profits."

Bonds, Currencies and Commodities

The 10-year Treasury note was recently down 16/32, its yield rising 4.25%.

The dollar was weaker against the Japanese yen, and particularly against the euro at 1.1941, after setting an all-time low against the European currency last week.

"The dollar exhibited a good deal of strength on Monday in anticipation of strong economic results, and it has really been a case of buy on the rumor, sell on the news," said Ashraf Laidi, chief currency analyst for MG Financial. "I don't believe that dollar weakness is driving today's stock market declines."

From a more macro perspective, "currency traders are not likely to reward the U.S.'s growth differential, when the interest rate differential favors other currencies, and last week 11 Federal Reserve officials stressed that rates will not be raised anytime soon," continued Laidi. The yield on U.S. Treasuries remains below that of other government bonds, most notably the U.K., Germany and Australia. These currencies should continue to benefit from foreign fixed income flows at the expense of the dollar, as long as managers can garner a higher yield on their investments.

Crude oil futures climbed 2.2% to $30.41 per barrel, and gold futures rose 1.4% to $398.00 an ounce.

Movers

J.P. Morgan

(JPM) - Get Report

announced that it had agreed to buy

Citigroup

(C) - Get Report

subsidiary Citicorp Electronic Financial Services, a benefits payment provider, for $380 million. J.P. Morgan shares declined 2 cents, or 0.1%, to $35.51, and Citigroup shares rose 4 cents, or 0.1%, to $46.95.

In early research calls, J.P. Morgan upgraded

Veritas

(VRTS) - Get Report

to overweight from neutral and raised fourth-quarter estimates. Veritas shares improved 75 cents, or 2%, at $37.57.

Lehman Brothers reiterated its overweight rating on

Nextel

(NXTL)

and raised its 52-week price target to $32 from $28. The company's shares rose 92 cents, or 3.8%, to $25.25.

Merrill Lynch lifted its rating on

Ameritrade

(AMTD) - Get Report

to buy from neutral, saying retail brokerage fundamentals are improving. Shares of the company jumped 58 cents, or 4.9%, to $12.54.

And after the close Tuesday,

Starbucks Coffee

(SBUX) - Get Report

reported stronger-than-expected same-store sales growth of 11% in November, beating forecasts. The company's shares climbed 57 cents, or 1.8%, to $32.08.

Overseas markets finished mixed. London's FTSE 100 dropped 0.4% to 4370 and Germany's Xetra DAX fell 0.5% to 3713. In Asia, the Nikkei closed 1.9% higher at 10,145, while the Hang Seng rose 0.7% to 12,087.

Looking ahead, the equity markets are closed for the Thanksgiving holiday tomorrow and there are no earnings or economic releases scheduled for Friday.