Updated from 4:09 p.m.Stocks hugged the flatline Wednesday as an early push to the upside gave way to profit-taking and volatile trading in the afternoon. The Dow Jones Industrial Average closed with a gain of 12 points, or 0.1%, to 8793, while the S&P 500 rose 2 points, or 0.2%, to 953. It was the fifth straight session of gains for both. The Nasdaq rose 7 points, or 0.4%, to 1563. "The market just got tired," said John Davidson, president and chief executive of PartnerRe Asset Management. "There's not yet enough proof of substantial economic growth, so it is difficult to expect the markets would go up straight from here." Meanwhile, President Bush signed a $350 billion bill that will give tax breaks to individuals, companies and investors. The tax package approved by Congress was less than half the size Bush had initially requested. Despite directionless prices, investors were fairly active. On the NYSE, 1.5 billion shares were traded, with advancers outpacing decliners by a ratio of 8 to 7. More than 2 billion shares traded hands on the Nasdaq, with winners leading losers by a margin of almost 8 to 7. Retail shares were led higher by Costco ( COST) after the company said fiscal third-quarter earnings rose 18%. Costco shares gained $1.43, or 4%, to $37.35. Elsewhere, SBC Communications ( SBC) could soon purchase some wireless spectrum from NextWave Telecom ( NXLC) through Cingular Wireless, a mobile-phone unit it owns along with BellSouth. The deal could be valued at $1.5 billion, according to media reports. Shares lost 13 cents, or 0.5%, to $25.32. RealNetworks ( RNWK) said it will begin selling songs for 79 cents each over the Internet, undercutting Apple Computer's ( AAPL) 99-cent offer. Shares gained 95 cents, or almost 12%, to $9.15. Rambus ( RMBS), a designer of computer memory chips, was up $2.26 to $18.70. A federal court dismissed a class-action suit that accused the company of improper conduct in trying to get its proprietary technology adopted as the industry standard. Shares climbed $1.11, or almost 7%, to $17.55.
Chipmaker Broadcom ( BRCM) had its rating lowered at A.G. Edwards to hold from buy. Broadcom shares fell 70 cents, or almost 3%, to $23.02. Microsoft ( MSFT) said it is lowering prices for its Office package of word processing, spreadsheet and email programs. Shares of the company were off 38 cents, or 1.5%, to $24.41. Among the most active stocks, VaxGen ( VXGN) got word that the Food and Drug Administration had accepted its new-drug application for an anthrax vaccine. The move clears the way for the company to start clinical testing of the candidate. Shares of the biopharmaceutical company jumped $2.28, or 68%, to $5.62. Although earnings season is practically over, investors still had a few results to mull over. Homebuilder Toll Brothers ( TOL) had better-than-expected earnings in its fiscal second quarter. Toll shares added $1.05, or 3.8%, to $28.50. Doughnut maker Krispy Kreme ( KKD) said its first-quarter profit rose almost 50% on sales growth amid new store openings. The company's shares gained $2.32, or 7%, to $34.18. On the negative side, Semtech ( SMTC) said its first-quarter profit dropped because of slowing demand and weak pricing in the chip sector. The maker of semiconductors for mobile phones also guided current-quarter results lower. Semtech shares lost $1.50, or 9%, to end at $15.40. The only economic news of the day was a government report on durable-goods orders, which fell 2.4% in April, following a 1.4% gain the prior month. "Today's numbers were weak, but we are really looking ahead at manufacturing indicators next week to gauge whether the economy is turning around. A lot more people are saying we're entering the growth phase of the economic cycle, but we want to confirm that," said Ozan Akcin, chief market strategist at Puglisi & Co. The dollar was lending support to the markets, edging up on speculation that the European Central Bank will adopt a tightening stance in its interest rate meeting next week. The dollar strengthened to $1.176 against the euro, and it also gained strength against the yen.
Treasuries were lower, with the yield on the 10-year note slightly higher at 3.32%. Crude oil prices were higher. Overseas markets were sharply higher, with London's FTSE 100 up 2% to 4071 and Germany's Xetra DAX up 1.6% to 2919. In Asia, Japan's Nikkei closed 1.4% higher at 8234, while Hong Kong's Hang Seng gained 0.95% to 9510. On Tuesday, the Dow shot up almost 180 points, or 2.1%, to 878. The S&P 500 climbed 18 points, or almost 2%, to 951, while the Nasdaq gained 46 points, or 3.1%, to 1556, its highest level since June 5, 2002. The Nasdaq's gain was led by eBay ( EBAY), Yahoo! ( YHOO) and Amazon.com ( AMZN), all of which hit 52-week highs.