Updated from 4:12 p.m. EST

Blue-chips couldn't hold their gains Thursday, despite positive economic news and solid profit reports from the retail sector, and tech stocks closed lower after being pressured by weakness in the chip sector.

The Dow Jones Industrial Average finished with a loss of 21.45 points, or 0.2%, to 10,106.13. The Nasdaq fell 20.36 points, or 1.2%, at 1731.52, and the S&P 500 fell 3.16 points, or 0.3%, to 1106.73.

Investors had plenty of positive news to sift through, particularly on the economic front, but it wasn't enough to give buyers the edge by the time the market closed. The Chicago purchasing managers' index rose to 53.1 in February from 45.1 in January, its highest level since June 2000. The government also revised its estimate of fourth-quarter gross domestic product growth to 1.4% from 0.2%, higher than the 0.9% estimate.

Meanwhile, the Labor Department said initial jobless claims rose to 378,000 in the week ended Feb. 23 from a revised 361,000 the previous week. Economists were expecting the number of first-time claims to rise to 385,000.

Late in the day, terrorism fears resurfaced. According to televised reports, Canadian fighter jets were shadowing an Air India flight bound for New York's John F. Kennedy International Airport because of concerns that a passenger on the plane might be on a terrorist watchlist.

Retailers continued to report their quarterly earnings this week, and many of the results were better than expected, but chain-store operators are generally adopting cautious stances on their near-term outlooks. Target ( TGT) was off 4.6% to $41.90 after reporting a 19% increase in fourth-quarter earnings, netting $658 million, or 72 cents a diluted share, compared with $552 million, or 61 cents a share, a year ago. The discount retailer said it remains comfortable with its annual earnings projection of 15% growth.

Claire's Stores ( CLE) lost 3.4% to $18.96 after the company posted a fourth-quarter profit of 61 cents a share, beating the consensus estimate of 58 cents. The teen apparel retailer said it remains comfortable with its previous earnings guidance of 12 cents a share in the first quarter and $1.04 a share for the next fiscal year.

Limited ( LTD) topped estimates as well, but the shares fell 1.5% at $18.01 after the company said first-quarter earnings would come in flat with the year-ago results and full-year earnings would grow in the low- to mid-single digits. The company posted fourth-quarter earnings of 75 cents a share, 2 cents better than the consensus.

Chipmakers had a difficult session as the Philadelphia Stock Exchange Semiconductor Index was lower by 3.1%. Genesis Microchip ( GNSS) was one of the day's biggest losers, dropping 43% to $23.49. The company reaffirmed its guidance for the fourth quarter, saying it sees revenue of about $55 million, and Genesis projected full-year revenue of more than $160 million, but several analysts came out with negative comments on the stock.

Likewise, British drugmaker Shire Pharmaceuticals ( SHPGY) saw its shares plummet after the company warned that increased competition and cost constraints could hinder its growth in 2002. The stock was recently losing 27% to $23.78.

After the close Wednesday, Gateway ( GTW) said it won't reach profitability until next year and warned that first-quarter and 2002 earnings will fall short of analysts' expectations. The PC maker now expects a pretax loss of $100 to $120 million, or 18 cents to 24 cents a share, excluding charges, on revenue of $1 billion. Shares dropped 9.8% to $4.60. Elsewhere in the tech sector, analysts at Morgan Stanley upgraded eBay ( EBAY), sending shares of the online auction house up $2.94, or 6%, to $52.05.

Shares of Kinder Morgan ( KMI) were selling off, despite the company reaffirming first-quarter and full-year earnings guidance, after an analyst raised questions about its pipeline unit's ability to successfully acquire other businesses. The stock was shed 11% to $41.

U.S. Treasury issues were lower. Around 4 p.m. EST, the 10-year note was off 10/32 to 100 1/32, yielding 4.87%.

Overseas, stocks were mixed, with London's FTSE 100 losing 1.5% to 5101 and Germany's Xetra Dax up 1.6% at 5039. Japan's Nikkei 225 gained 0.1% to 10,588, while Hong Kong's Hang Seng fell 1.6% to close at 10,483.

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