Dow Down 52, Nasdaq Up 7 on Iran Worries

Officials with Teva Pharmaceutical Industries, Ltd. attend the opening bell ceremony at the Nasdaq stock market, Wednesday, Feb. 21, 2007 in New York. The generic drug company is based in Israel. (AP Photo/Mark Lennihan) (Mark Lennihan - AP)

NEW YORK -- Wall Street turned in a mixed performance Thursday as Iran's refusal to suspend uranium enrichment rattled investors and tempered a tech rally spurred by a strong outlook from chip maker Analog Devices Inc.

Investors were uneasy after a U.N. official said Iran did not agree to Security Council demands to suspend its nuclear ambitions. Also hurting stocks was a U.S. government report that showed a larger-than-expected drop in gasoline and heating oil inventories, causing crude prices to bound above $60 a barrel.

This chilled the mood among investors who at first were encouraged by upbeat corporate announcements and a rally in foreign stock markets. Strength among semiconductor stocks drove the Nasdaq composite index to six-year highs.

Analog Devices Inc., which gave an optimistic outlook about improving business conditions, drove chip stocks. Investors were also encouraged about takeover activity this year as Whole Foods Market Inc. said it will buy rival Wild Oats Markets Inc. in a $565 million deal.

"With the lack of real market-moving news traders are taking a look at the Iran thing and the technical breakdowns and we're seeing a little bit of a pause on that," said Jody Giraldo, vice president of equities at vFinance.

The Dow Jones industrial average fell 52.39, or 0.41 percent, to 12,686.02.

Broader stock indicators were mixed. The Standard & Poor's 500 index was down 1.25, or 0.09 percent, at 1,456.38. The Nasdaq rose 6.52, or 0.26 percent, to 2,524.94; the tech-dominated index is at a six-year high and finished past the 2,524.31 half-way mark of its all-time high of 5,048.62 set on March 10, 2000.

Overseas, Japan's Nikkei stock average closed up 1.09 percent, making its first foray above 18,000 in nearly seven years; investors were cheered by the Bank of Japan's decision to raise interest rates, indicating its confidence in the long-flagging Japanese economy. At the close, Britain's FTSE 100 was up 0.37 percent, Germany's DAX index was up 0.46 percent, and France's CAC-40 was up 0.23 percent.

The aftermath of Wednesday's stronger-than-expected consumer inflation figures from the government sent bond yields higher for the second day. The yield on the benchmark 10-year Treasury note rose to 4.73 percent from 4.70 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices fell.

Oil rose in an erratic session after the Energy Department reported increased demand for crude-based products. A barrel of light sweet crude rose to a seven-week high, up 88 cents at $60.95 on the New York Mercantile Exchange.

The market had little reaction to a Labor Department report that said fewer Americans applied for unemployment benefits last week after filings jumped in the prior week by the most since 2005. Jobless claims fell to 332,000.

Ryan Larson, senior equity trader at Voyageur Asset Management, a division of RBC Dain Rauscher, said the markets initially pulled back after word of the diplomatic tensions with Iran _ then dropped further as stocks hit technical resistance levels. Traders believe those levels are 12,760 for the Dow and 2,530 for the Nasdaq.