Updated from 4:08 p.m. EDT

Stocks closed basically flat Wednesday in an up-down session, as investors struggled to digest positive earnings news and surprisingly high consumer price data, which ratcheted up concern that the Fed may raise interest rates to fend off inflation.

The Dow lost 3.33 points to finish at 10,377.95; the S&P 500 shed 1.27 points, or 0.11%, at 1128.17; and the Nasdaq was down 5.23, or 0.26%, to 2024.85. The 10-year Treasury note, which sold off Tuesday after a strong retail sales report that ignited rate-hike fears, was down 3/32 in price to yield 4.36%, while the dollar gained vs. the euro and yen.

Volume on the New York Stock Exchange exceeded 1.5 billion shares, and decliners outnumbered advancers by about 7 to 2. On the Nasdaq, over 1.8 billion shares changed hands, and decliners outpaced advancers by about 3 to 2.

After posting modest gains, the Nasdaq briefly pushed as low as 2 points below its 50-day moving average of 2016.37, which represents a technical point of resistance for the index. The S&P went below its 50-day moving average on Tuesday and continued lower Wednesday.

"This little sell-off in the last few hours of the day shows that investor psychology may have changed a bit, and that's probably due to the fact that interest rates have now broken a five-year downtrend and now appear to be rising," said Michael Sheldon, chief market strategist at Spencer Clarke. "People are quick to pull the trigger on profits rather than wait for the market to rally further."

"The next few weeks are likely to be unsettled with strong earnings and economic news on one hand being offset by rising rates and the risk of inflation down the road," Sheldon added.

The government said consumer prices rose 0.5% in March, topping the consensus forecast for a 0.3% increase. Prices in February rose 0.3%. Excluding food and energy costs, prices rose 0.4%, twice that of the consensus forecast and the biggest one-month increase since 2001. The so-called core rate rose 0.2% in February.

"The debate the Fed has been having for the last few months is whether they should raise rates pre-emptively and then raise them slowly, or should they hold off and then raise them more quickly after inflation showed up," said Trip Jones, managing director at Sungard Institutional Brokerage. "Now, we could see them raise rates sooner and faster, and that's a drag on stocks. That's what the market is focusing on here."

After the inflation data were released, Standard and Poor's changed its outlook on the likelihood of the Fed instituting a rate hike. After saying on Tuesday that the central bank was unlikely to change its position before the presidential elections in November, Sam Stovall, the company's senior investment strategist, said he now thinks that the federal funds rate is likely to be raised 25 basis points in June.

Paul Mendelsohn, chief investment strategist at Windham Financial Services, said that the four main pillars supporting the year-long bull market were accommodative monetary policy in the form of low interest rates, stimulative fiscal policy in the form of tax cuts, a weaker dollar and a lack of inflation. Now, he said, those factors seem to be disappearing all at once. "That, coupled with the geopolitical events taking place that potentially threaten George Bush's presidency, could be a problem in terms of the market looking forward," Mendelsohn said. "Even though earnings are coming in okay, the market is going to have to deal with this fear."

"If you look at earnings growth and GDP growth in the third and fourth quarters, and you find that this is the best we can do and the best is behind us, you're left wondering what it's going to look like going forward" he added. "That's really the unknown that investors are grappling with in the last couple of days."

Safe-haven positions are getting plastered for the second straight session with precious metals leading the freefall. Gold futures shed 1.6% while silver lost 5.5%. The healthcare sector showed strength as investors positioned for a higher interest rate environment. The AMEX Pharmaceutical Index gained 1.1% on the day.

Intel ( INTC) finished down 30 cents, or 1.1%, at $27.37, despite saying after the bell Tuesday that first-quarter profit nearly doubled from a year ago and should remain strong in the current period. Traders were concerned about the company's top line, which at $8.091 billion in the first quarter was a touch below expectations.

Shares of DuPont ( DD) added $1.31, or 3%, at $45 after it raised its quarterly earnings forecast as a rebounding economy fueled higher-than-expected volume across most businesses. The second-largest U.S. chemical maker expects first-quarter earnings of about 95 cents a share, excluding special items, up from a prior estimate of 65 cents to 75 cents a share. The company said Tuesday it would cut about 3,500 jobs because of higher raw material costs.

Also trading lower was McDonald's ( MCD), which said last night that March same-store sales rose 5%, slightly less than hoped. Investors were unimpressed with raised earnings guidance, in which the hamburger chain predicted first-quarter net income of 40 cents a share, 3 cents better than expected. The shares closed down $1.27, or 4.5%, to $27.

Delta ( DAL) shares were flat after announcing it lost $272 million, or $3.12 a share, in the first quarter. The year-ago loss was $466 million, or $3.81 a share. The airline blamed rising fuel prices for the big first-quarter deficit. Its shares broke even for the session at $7.70.

American Standard ( ASD) reported a 33% rise in first-quarter profit, meeting Wall Street expectations. The heating and cooling systems maker had a profit of $84.6 million, or $1.14 a share, compared with $63.8 million, or 87 cents a share, in the same quarter last year. It raised its first-quarter guidance in March. Its shares closed down $5.60, or 5%, to $106.90.

Bank of America ( BAC) topped the consensus estimate, reporting that first-quarter earnings rose 11% from a year ago, thanks to strength in its core lending operations. It earned $2.68 billion, or $1.83 a share, in the first quarter, up from $2.42 billion, or $1.59 a share, a year earlier.

The latest quarter doesn't include FleetBoston results, which the company acquired on April 1. It does include a charge of $285 million, or 16 cents a share, related to a settlement paid in the mutual fund probe. Analysts expected earnings of $1.80 a share.

Harley-Davidson ( HDI) cruised past expectations, reporting a 9.9% increase in profit, thanks to strong retail sales of its choppers. Its net income rose to $204.6 million, or 68 cents a share, from $186.2 million, or 61 cents a share, a year earlier. Its shares closed up $3.87, or 7%, at $59.50.

Overseas markets sank, with London's FTSE 100 closed down 0.7% to 4485 and Germany's Xetra DAX down 1.4% to 4013. In Asia, Japan's Nikkei closed down 0.2% to 12,098, while Hong Kong's Hang Seng lost 2.8% to 12,670.

Another slew of first-quarter earnings releases are due out before Thursday's opening bell. Among the major announcements scheduled, Citigroup ( C) is expected to report earnings of 94 cents a share for the quarter, up from last year's 79 cents a share; Continental Airlines ( CAL) is expected to report a loss of $1.43, up from last year's loss of $2.75; Johnson Controls ( JCI) is expected to report earnings of 80 cents a share, up from last year's 70 cents a share and UnitedHealth Group ( UNH) is expected to report earnings of 87 cents a share, up from last year's 65 cents a share.

Investors will also be chewing on some significant earnings from companies that reported after the bell on Wednesday. Shortly after the close, AMD ( AMD) said it earned 12 cents a share on revenue of $1.24 billion in the first quarter, well above analysts' estimates for the top and bottom lines. In addition, Texas Instruments ( TXN) met analysts' earnings estimates and said it anticipates second-quarter revenue will beat the current consensus.

Also on Thursday morning, the Labor Department will release the latest weekly initial jobless claims figures at 8:30 a.m. EDT. Economists predict claims will total 335,000 for the week ended April 10, up from 328,000 in the previous week.