NEW YORK (CNN/Money) -
U.S. stocks closed lower Thursday, with most of the declines amassed in the last half hour of trading, when the Dow industrials abandoned an earlier rally and the Nasdaq's losses deepened.
The Nasdaq composite (down 30.51 to 2045.96, Charts) lost almost 1.5 percent, led by declines in semiconductor stocks. The Standard & Poor's 500 (down 4.76 to 1147.06, Charts) index gave back 0.4 percent, while the Dow Jones industrial average (down 7.26 to 10664.73, Charts) closed just below unchanged.
An upbeat earnings release from Wal-Mart Stores Thursday morning and Applied Materials late Wednesday set the positive tone in the market during the morning, which was further supported by a drop in the weekly jobless claims report. But the market couldn't sustain that, heading south in the last hour as the major indexes hit some serious resistance as they approached key technical levels.
Markets were closed Monday for Presidents Day, then the major indexes rallied Tuesday on a slew of mergers but waffled Wednesday, finally closing lower. Exacerbating the volatility was the light volume, with a number of Wall Street participants taking the full week off.
"The money is still chasing stocks and that will continue," said Peter Cardillo, chief market analyst at S.W. Bach. "But I think the Nasdaq is having trouble as it approaches that key 2,100 level."
In the late afternoon, the Dow briefly hit a fresh 32-month high and the S&P 500 traded near a new 23-month high. But neither index was able to sustain those levels.
One bright spot on the day was Dow component Wal-Mart (WMT: up $1.18 to $58.38, Research, Estimates), which reported earnings of 63 cents per share, up from 57 cents a year earlier and in line with expectations. The retailer also lifted its forecast for its first quarter and full-year earnings per share results. Its stock climbed about 2 percent.
The week is heavy on retail earnings, although most of the S&P 500 companies have already finished reporting.
After the close Thursday, technology bellwether Hewlett-Packard (HPQ: up $0.35 to $23.86, Research, Estimates) reported fiscal first-quarter earnings of 35 cents per share, in line with estimates and up from a year earlier. The company also raised its sales guidance for the fiscal second-quarter.
There are no market-moving earnings due Friday. Friday's only economic report is on consumer prices. January prices, due before the bell, are expected to show a rise of 0.3 percent after rising 0.2 percent last month. The so-called core CPI, which excludes volatile energy prices, is expected to have risen 0.1 percent, as it did in December.
On the move
Applied Materials (AMAT: down $0.18 to $22.13, Research, Estimates) had rallied as much as 4 percent during the session, but erased that by the close, along with the broader technology pull back.
Late Wednesday, Applied Materials reported fiscal first-quarter earnings that topped forecasts. The chip gear maker earned 12 cents a share, four cents more than what analysts were expecting and up from breakeven results a year earlier. The company also said new orders for the quarter jumped 32 percent from the fiscal fourth-quarter.
A number of semiconductors declined, with the Philadelphia Semiconductor index (down 7.73 to 514.73, Charts), or the Soxx, losing 1.5 percent.
ADC Telecom (ADCT: down $0.36 to $3.03, Research, Estimates) fell 10.6 percent in active Nasdaq trade after the company issued a fiscal second-quarter forecast for earnings and sales that is lower than what analysts are expecting.
Another telecom, Nextel Communications (NXTL: down $1.07 to $27.55, Research, Estimates), fell 3.7 percent in active Nasdaq trade on a "sell the news" response, after the company reported earnings of 48 cents per share, 8 cents more than expected.
Also among the losers, Intuit (INTU: down $3.95 to $45.24, Research, Estimates) tumbled 8 percent after the personal finance software firm said its third-quarter net income would come in well below expectations.
On the upside, American shares of Irish drug maker Elan (ELN: up $1.53 to $13.33, Research, Estimates) added 13 percent, one session after the company said its experimental treatment for multiple sclerosis was ready to be considered for regulatory approval a year ahead of schedule. Elan gained 34 percent Wednesday. Elan's U.S. co-developer, Biogen Idec (BIIB: up $5.65 to $58.88, Research, Estimates), rallied another 10.6 percent, after adding 20 percent Wednesday.
On Thursday, Biogen's stock was upgraded by Wachovia and Credit Suisse First Boston.
Market breadth was negative. On the New York Stock Exchange, where 1.5 billion shares traded, losers beat winners by five to three. On the Nasdaq, the decliners/advancers ratio was almost two-to-one on volume of 2.03 billion shares.
Treasury bond prices edged up, with the 10-year note gaining 4/32 of a point in price, pushing its yield down to 4.03 percent from 4.05 percent late Wednesday. Bond prices and yields move in opposite directions. The dollar was little changed versus the yen and was weaker versus the euro.
In commodities markets, NYMEX light sweet crude oil gained 16 cents to settle at $34.64 a barrel. The NYMEX briefly closed because of technical problems before reopening, then shut down early at 12:45 p.m. ET. COMEX gold fell $2.50 to $410.30 an ounce.
In international trade, European and Asian markets closed mostly higher.
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