A barrage of conflicting signals on interest rates kept investors off balance, leaving the Dow industrials little changed while most stocks ended with modest losses.
The Dow Jones industrial average ended with a gain of 2.21, closing at 11,036.34. During the session, the Dow rose 83 points and tumbled nearly 67 points from Tuesday's close.
Broader indicators were lower. The Standard & Poor's 500-stock index fell 6.30, to 1344.15, and the Nasdaq composite index fell 28.52, to 2808.74.
The fear of higher rates, which has rattled stock and bond markets all summer, again dominated trading. Stocks initially tumbled after the Bank of England increased its base lending rate for the first time in more than a year, a surprise move that followed a string of seven cuts.
But the market rebounded after Federal Reserve Chairman Alan Greenspan spoke of the world's prosperity in a speech that did not address interest rates or inflation. [Story, Page E1.]
"Everyone is trying to guess what the Fed might be thinking," said Tim O'Neill, chief economist for the Bank of Montreal and Harris Bank.
But in a separate appearance this afternoon, Fed governor Laurence Meyer ended the burst of optimism. Meyer said he is unsure whether the U.S. economy is overheating, although he noted that wage pressures are building and said the case for a third rate increase is uncertain.
O'Neill said the threat of higher interest rates, which can cut into corporate profits and increase the cost of borrowing, continues to keep investors on edge.
"The markets are responding to data events to a greater degree than they did in the past," O'Neill said.
The market's midday boost was helped along by Abby Joseph Cohen, the bullish chief market strategist at Goldman Sachs Group Inc. In a report to clients, Cohen said strong corporate earnings should help the S&P 500 top 1385 by the end of the year. She also expects the Dow to top 11,500.
Cohen noted, however, that escalating labor costs could threaten corporate profits.
Certain technology companies posted major gains today. Global Crossing, the architect of an undersea fiber network, shot up 5 1/4, to 25-9/16, after the company secured a major investment from Microsoft and Softbank.
Frontier Corp., a long-distance provider that Global Crossing plans to acquire, rose 8-13/16, to 45 1/8.
Chevron, up 1 1/4 at 94-7/16, and Exxon, up 1-11/16 at 81-3/16, helped the Dow contain its losses as oil companies continued to benefit from rising prices.
But investors moved away from consumer companies such as Kodak, down 1 1/2 at 72-9/16, and Johnson & Johnson, down 1-5/16 at 100 1/2.