Updated from 4:05 p.m. EDT

After spending much of the month rallying on mixed economic news, stocks sat still Tuesday following some roundly positive data.

The Dow Jones Industrial Average closed flat at 9323. The Nasdaq rose almost 2 points, or 0.1%, to 1668, while the S&P 500 was virtually unchanged at 1011.

"I still expect the markets to move higher from here. Not a rocket ship to the sky, but higher than where it is today by year-end," said Douglas Altabef, market analyst at Matrix Asset Advisors. "This is typical of a recovery from a bear market, with stocks surreptitiously gaining a great deal of ground back."

The consumer price index was unchanged in May, while economists had been expecting a 0.1% decline, following a 0.3% drop in April. The core inflation number, excluding food and energy, rose a more-than-expected 0.3%.

The housing sector continued to be strong, as home starts hit 1.732 million in May and housing permits reached 1.788 million, both above initial forecasts. Industrial production rose a slightly higher-than-expected 0.1% in May, from a 0.6% decline the prior month. Capacity utilization, a measure of how much companies are using their fixed resources, stayed practically unchanged at 74.4%, within economists' estimates.

On the New York Stock Exchange, 17 stocks fell for every 15 that rose, with 1.5 billion shares traded. Almost 1.9 billion shares traded hands at the Nasdaq, with advancers slightly ahead of decliners.

One of the sectors with the most selling was biotech, with the Nasdaq biotech index down 1.5%.

"The problem with a few sectors is valuation, particularly tech and biotech. These are highly volatile areas which are clearly way overvalued or returning to their late nineties valuations," noted Jim Melcher, president and market strategist at Balestra Capital.

Analysts were busy again on Wall Street. AT&T ( T), after Merrill Lynch downgraded it to sell from neutral, citing a slow enterprise recovery and continued competition in the consumer area. The brokerage expects revenue at the phone company to fall this year and next. AT&T shares dropped $1, or 4.8%, to $20.06.

Also weighing on the Dow, Coca-Cola ( KO) said on Tuesday it will take $9 million pretax writedown after a probe revealed accounting irregularities related to a frozen beverage program. Shares lost 83 cents, or 1.7%, to 47.37.

Robert Pavlik, portfolio manager at Oaktree Asset Management, thinks today's numbers still give the Federal Reserve reason to cut rates, and "based on the potential lower cost of borrowing, corporate spending will likely increase as the year progresses." So he has been adding to tech positions on this assumption.

The 10-year Treasury note was down after the data, with the yield up 8 basis points to 3.26%.

Lehman Brothers said Microsoft's ( MSFT) valuation remains compelling and shares of the company could rally, but the research firm suggested a defensive strategy in the stock. Microsoft shares rose 63 cents, or 2.5%, to $26.02.

In another research note, CSFB increased its full-year profit estimates for Altria Group ( MO), citing fewer litigation problems, an improvement in fundamentals and a weaker dollar. Shares climbed 28 cents, or 0.7%, to $43.16.

Drugmaker Pfizer ( PFE) gained $2.15, or 6%, to $36.75 despite lowering its earnings projection for 2003. But the company said profit and revenue in 2004 will be strong, beating analysts' forecasts.

Charles Schwab ( SCH) raised its second-quarter earnings forecast after it reported higher average trades so far this year. Shares of Schwab fell 6 cents, or 0.5%, to $11.28.

Elsewhere, after meeting with regulators, Tyco ( TYC) said it will restate results going back to 1998 because of accounting issues. Shares rose 19 cents, or 1%, to $19.76.

In earnings news, Vivendi Universal ( V) narrowed its first-quarter loss and met Wall Street's expectations. The company also said it had "strong growth" in operating income, which led it to stand by its 2003 earnings outlook. Shares lost 63 cents, or 3%, to $20.00.

Circuit City Stores ( CC) reported a fiscal first-quarter net loss on lower sales and higher costs, but beat lowered Wall Street estimates. Shares of the electronics retailer rose 91 cents, or 13%, to $7.78.

Pier 1 Imports ( PIR) reported lower quarterly earnings, although the numbers were in line with analysts' estimates, as bad weather and a weak economy hurt sales. Pier 1 lost 46 cents, or 2.2%, to $20.59.

Overseas markets were higher Tuesday, with London's FTSE 100 rising 0.9% to 4190 and Germany's Xetra DAX up 0.7% at 3285. In Asia, Japan's Nikkei rallied 2.2% to 9033, while Hong Kong's Hang Seng gained 1.7% to 10,030.

The dollar was firmer against the yen and euro. Brent crude futures were higher in London.

On Monday, the Dow gained 202 points, or 2.2%, to 9319, and the Nasdaq climbed 40 points, or 2.5%, to 1667. The S&P 500 finished the day up 22 points, or 2.2%, at 1011.

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