NEW YORK ( TheStreet) -- Stocks closed near the flat line Wednesday, though the Dow and Nasdaq managed to eke out marginal gains, as investors wrestled with disquieting June retail sales and lower economic expectations from the Federal Open Market Committee on the one hand, and strong earnings results on the other.

The Dow Jones Industrial Average finished nearly 4 points higher, or 0.04%, to 10,367, marking its seventh straight day with a positive close. The S&P 500 lost a fraction of a point, or 0.02%, at 1095. But the tech-heavy Nasdaq advanced 8 points, or 0.4%, to 2250.

Helping the tech sector today, Intel's ( INTC) quarterly assessment, reported late Tuesday, fueled earnings-season optimism with a second-quarter profit of 51 cents a share and sales of $10.8 billion, which blew past estimates for earnings of 43 cents a share on sales of $10.25 billion. CEO Paul Otellini cited strong corporate demand and deemed it "the best quarter in the company's 42-year history." On Wednesday, the stock gained 1.7% to $21.36.

Bob Enck, chief executive of Equinox Fund Management, blamed weaker-than-expected June retail sales for weakness seen earlier in the day.

"We're seeing mixed news. There has been some positive earnings news but the retail sales number is down for the second month -- that mixed news combined with other uncertainties such as unemployment, tax increases and financial reform is weighing on investors. All these uncertainties also mean that it has never been more important for investors to hold diversified portfolios of uncorrelated assets," Enck said.

"Regardless of how good earnings news could be tomorrow, you still need to have a balancing effect in your portfolio because of the uncertainty of the macroeconomic environment."

Overseas on Wednesday, Hong Kong's Hang Seng added 0.6%, and Japan's Nikkei soared 2.7%. The FTSE in London slipped 0.3%, while the DAX in Frankfurt gained 0.3%.

The Economy

The Department of Commerce said retail sales fell 0.5% in June, which was a milder drop than May's 1.1% decline. Excluding autos, June sales slipped 0.1%, after falling 1.2% in May. Economists had been expecting a 0.2% dip in June and, excluding autos, June sales were expected to remain unchanged.

"Clearly, ongoing concerns about the lack of job growth and the slowdown in the economy are weighing on consumers," said Jim Baird, partner and chief investment strategist for Plante Moran Financial Advisors.

"We should see meaningful gains in retail sales if consumers gain confidence in the sustainability of the recovery, but the longer-term focus on debt reduction is likely to keep consumer spending from reaching pre-recessionary levels for the foreseeable future," he said.

The Mortgage Bankers Association said mortgage loan-application volume dropped a seasonally adjusted 2.9% last week. Purchasing applications and refinancing activity also fell week over week, by 3.1% and 2.9%, respectively. The MBA's purchasing index has now slipped to the lowest level since December 1996.

Export prices decreased 0.2% in June, and import prices fell 1.3%, according to the Labor Department. Excluding agriculture, export prices were down by 0.2% after rising 0.5% in May, and import prices, excluding oil, declined by 0.6%, compared with May's growth of 0.5%.

Business inventories rose by 0.1% in May after growing 0.4% in May, according to the Department of Commerce's report. Economists had been anticipating an uptick of 0.2%.

The Energy Information Administration said crude oil inventories shed 5.1 million barrels in the week ending July 9, exceeding the decline of 2.6 million barrels that analysts polled by Platts had been expecting. The drop likely came as a relief after the American Petroleum Institute reported a 1.74 million-barrel gain to crude supplies late Tuesday. Gasoline and distillate supplies, meanwhile, rose to much higher-than-expected levels, adding 1.6 million barrels and 2.9 million barrels, respectively. Analysts had been projecting milder gains of 950,000 barrels and 800,000 barrels.

Finally, the Federal Open Market Committee released minutes from its June 22-23 meeting when members voted to keep the target rate at near-zero levels for an extended period. In it, officials downgraded growth expectations, but still said they expect a moderate recovery.

Company News

The tech sector saw the best gains thanks to Intel's strong report. Cisco Systems ( CSCO) was the Dow's top performer, followed by Intel, Microsoft ( MSFT) and Hewlett-Packard ( HPQ).

Home Depot ( HD), American Express ( AXP) and Alcoa ( AA) struggled the most on the blue-chip average.

Comcast's ( CMCSA) takeover of General Electric's ( GE) NBC Universal division has been cleared by the European Commission. Shares of Comcast traded 0.2% lower.

eBay ( EBAY) is being sued for more than $3.8 billion by a firm that claims that the online retailer stole its idea for PayPal, infringing on six patents to develop online payment systems.

British Airways , American Airlines ( AMR) and Iberia were granted European Union regulatory approval for plans to share more of their trans-Atlantic routes.

Motorola ( MOT) is in talks to sell its telecom-equipment unit to Nokia Siemens Networks, according to The Wall Street Journal.

In earnings news, Yum! Brands ( YUM) outpaced expectations by 4 cents with a second-quarter profit of 58 cents a share on sales of $2.57 billion. Wall Street had been projecting sales of $2.54 billion.

ASML ( ASML), provider of technology systems for the semiconductor industry, swung to a profit in the second quarter and said it expects 2010 sales to be 10% to 15% higher than its 2007 record.

Computerized tax-return prep company Jackson Hewitt ( JTX) exceeded estimates with fourth-quarter adjusted earnings of $1.14 a share and sales of $125.6 million. Consensus estimates had projected a profit of $1.06 a share on sales of $120.3 million.

Adtran's ( ADTN) second-quarter profit of 44 cents a share and sales of $150.4 million beat expectations for earnings of 35 cents a share on sales of $137.9 million.

Insurance holding company Progressive ( PGR) missed expectations by 4 cents with second-quarter earnings of 32 cents a share. Sales of $3.71 billion were in line with analysts' estimates.

A majority of panel members from the Food and Drug Administration voted to keep GlaxoSmithKline's ( GSK) diabetes treatment drug Avandia on the market, according to a report from The Wall Street Journal. Still, experts raised concerns about the safety of the drug based on a review of conflicting clinical data.

Commodities and the Dollar

Following the EIA data, the August crude oil contract settled 11 cents lower, at $77.04 a barrel.

Elsewhere in commodity markets, the August gold contract traded $6.50 lower to settle at $1,207 an ounce.

The dollar was trading lower against a basket of currencies, with the dollar index down by nearly 0.2%.


The benchmark 10-year Treasury was up 20/32, lowering the yield to 3.052%.

The two-year note rose 4/32, dropping the yield to 0.609%. The 30-year bond increased 1 8/32, diluting the yield to 4.037%.

--Written by Melinda Peer and Sung Moss in New York.

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