Updated from 4:06 p.m. EDTStocks ended mixed Wednesday following a downgrade of Cisco ( CSCO) and a tepid endorsement of the economy from Federal Reserve Chairman Alan Greenspan. As the two-month-old rally struggled to survive, trading was extremely choppy, with the Dow Jones Industrial Average eking out a gain of 25.07 points, or 0.3%, to 8516.43. The Nasdaq dropped 1.22 points, or 0.1%, to 1489.87, while the S&P 500 rose 3.69 points, or 0.4%, to 923.42. Greenspan addressed Congress on the state of the economy and reiterated many of the points he had been making in recent weeks, saying that expectations for an economic recovery aren't unreasonable, but that current data have been disappointing. "We do not yet have sufficient information on economic activity following the end of hostilities to make a firm judgment about the current underlying strength of the real economy. Incoming data on labor markets and production have been disappointing," Greenspan said. "Looking ahead, the consensus expectation for a pickup in economic activity is not unreasonable, though the timing and extent of that improvement continue to be uncertain." Greenspan's measured comments left markets unchanged and traders in search of direction, said Brian Pears, head of equity trading at Victory Capital Management. "The market felt tired last week, with the more volatile names performing better and the beaten-down names catching a bid. That's a sign of a tired market," said Pears. "What equity traders want to see is fundamentals change. We like earnings news. I'm not so sure we're getting much information on that, so we default back to choppy trading." Among individual stocks, Deutsche Bank downgraded Cisco to hold from buy. In the brokerage's view, Cisco's recent run-up has taken it as high as it is likely to go in the current technology spending environment. Cisco fell 29 cents, or 1.8%, to $15.70. Meanwhile, the dollar continues to be a concern for investors following news that mega-investor George Soros is short-selling it. The currency also could be affected by terrorism fears, which grew after the U.S. raised its terror alert level Tuesday. The U.S. currency fell slightly against the euro and yen.
In blue-chip news, Hewlett-Packard ( HPQ) reported a fiscal second-quarter profit that beat estimates. Chief Executive Carly Fiorina predicted revenue and earnings will meet expectations in the fiscal second half. H-P shares rose 89 cents, or 5.2%, to $17.94. Altria ( MO), parent of Philip Morris, gave a measure of strength to the Dow after a Florida appeals court reportedly overturned the $145 billion class-action ruling against the tobacco industry. In July 2000, the Florida court found the industry liable for making thousands of Floridians sick, and awarded the largest settlement for punitive damages in American history. Altria rose $3.39, or 9.7%, to $38.30 on the news. Other tobacco stocks rallied. R.J. Reynolds ( RJR) gained $1.57, or 5%, to $33.28; British American Tobacco unit Brown & Williamson ( BTI) gained $1.66, or 8.4%, to $21.36; and Carolina Group ( CG), a tracking stock of Lorillard Tobacco, rose $1.17, or 5.6%, to $22. On Tuesday, news of a case of mad cow disease in Canada pushed fast-food and restaurant names lower, led by blue-chip McDonald's ( MCD), which fell 6.4%. Analysts and companies attempted to quell fears on Wednesday, with Lehman Brothers upgrading McDonald's to overweight from equal weight, telling investors that the mad cow fears are overblown. McDonald's shares gained 35 cents, or 2.1%, to $17.30 Wednesday. Elsewhere, Wendy's ( WEN), which fell 6.6% on Tuesday, told investors that the company had no plans to change its business plan, pointing out that Canadian authorities have said the diseased beef never entered the marketplace. Also, Yum! Brands ( YUM), which owns KFC, Pizza Hut and Taco Bell, was upgraded to outperform from in line by Goldman Sachs. Wendy's fell 16 cents, or 0.6%, to $28.39, while Yum! rose 26 cents, or 1%, to $26.56. Edgar Bronfman Jr., Vivendi Universal's ( V) vice chairman, is interested in making an offer to buy back the company's U.S. entertainment assets for an estimated $15 billion. Bronfman plans to form a group of investors that could include Cablevision Systems ( CVC). Vivendi shares gained $1.19, or 7.4%, to $17.30, while Cablevision dropped 63 cents, or 3%, to $20.15.
Shares in Tularik ( TLRK), a small outfit producing oral medications that fight cancer, jumped $2.04, or 32.2%, to $8.38 after Amgen ( AMGN) said it would take a 21% stake in the company. Amgen shares fell 33 cents, or 0.6%, to $60.70. Harry Potter mania proved profitable for Amazon.com ( AMZN), which said the latest book has sold 875,000 copies. Amazon gained 27 cents, or 0.9%, to $31.75. In earnings news, Talbots ( TLB) announced first-quarter earnings that topped Wall Street estimates by a penny, while Polo Ralph Lauren ( RL) announced fourth-quarter earnings that met expectations. It also warned that first-quarter earnings could miss current estimates. Talbot's gained 7 cents, or 0.3%, to $26.78, while Polo fell 34 cents, or 1.5%, to $23.01. National Semiconductor ( NSM) reiterated fourth-quarter guidance and said it plans to restructure operations. Shares gained 9 cents, or 0.4%, to $23.07. European markets were sharply lower after Dutch firm Philips Electronics ( PHG) told investors that the appreciating euro was pressuring its top line. The company said its consumer electronics and semiconductor segments were bearing the brunt of the problems. The shares fell 26 cents, or 1.5%, to $17.33 in New York. London's FTSE 100 closed down 0.9% to 3936, while Germany's Xetra DAX dropped 0.4% to 2827. In Asia, Japan's Nikkei closed 0.5% lower at 8018, while Hong Kong's Hang Seng gained 0.1% to 9059.