updated 9/15/2006 9:10:17 AM ET 2006-09-15T13:10:17

Wall Street closed mixed Thursday, with blue chips falling and technology stocks managing a slight gain while investors tussled with their concerns about inflation and the overall health of the economy.

Major Market Indices

Lower oil prices, which have helped drive stock rallies in recent days, remained a bright spot but another drop Thursday wasn’t enough to offset investor concerns about inflation ahead of next week’s Federal Reserve meeting. Investors grew uneasy Thursday after the Labor Department reported import prices rose a larger than expected 0.8 percent in August.

The Commerce Department said sales rose an anemic 0.2 percent last month, and although Wall Street expected a decline, some investors worried that consumer spending was losing momentum. The modest increase in retail sales followed a 1.4 percent rise in July.

Thursday’s relatively quiet session was to be expected after sharp rallies earlier in the week — the gains were actually a little unexpected for some market watchers.

“Everyone knew you couldn’t make money in September,” said Richard E. Cripps, chief market strategist with Stifel Nicolaus. He contends some investors who regard September as a consistently weak month for the markets and perhaps an indicator of how Wall Street will finish the year have been caught off guard by the recent rally. But Thursday’s decline was quite muted.

Oil prices fell even after the United States reported a drop in crude inventories on Wednesday. A barrel of crude fell 75 cents to settle at $63.22 a barrel on the New York Mercantile Exchange. Natural gas futures for October fell to their lowest level in two years after the Energy Department released figures showing stores of natural gas were much larger than expected.

According to preliminary figures, the Dow Jones industrial average fell 15.93, or 0.14 percent, to 11,527.39.

Broader stock indicators were mixed. The Standard & Poor’s 500 index was down 1.79, or 0.14 percent, to 1,316.28 while the Nasdaq composite index gained 1.06, or 0.05 percent, to 2,228.73.

Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.79 percent from 4.76 percent late Wednesday. The dollar was up against other major currencies, while gold prices fell.

More economic news came from the Labor Department, which reported that the number of Americans filing claims for unemployment benefits fell to 308,000 last week, down by 5,000 from the previous week. The drop pushed claims to a seven-week low.

After the stock market rose amid a paucity of economic numbers earlier in the week, investors have been eager to get their hands on a few key pieces of data.

Wall Street is looking to the Labor Department’s consumer price index due Friday with hopes that the key measure of inflation will provide insight into how the Fed might act at its Sept. 20 meeting. The Fed took a break last month and didn’t raise interest rates after doing so 17 straight times over two years as it sought to contain inflation.

Cripps said that while many investors seem to think the Fed won’t adjust rates, Wall Street might be feeling somewhat uneasy as the meeting approaches.

“You have a lot of uncomfortable sideliners at the moment,” he said, adding that if the Fed leaves rates unchanged, investors who have been biding their time until the meeting could re-enter the market, potentially prompting another rally.

John C. Forelli, portfolio manager for Independence Investment LLC, contends that the runup, which ceded some ground Thursday, will be short-lived.

“I think after a string of a couple of unexpected good days the market paused on general profit taking,” Forelli said.

He contends the rally seen in recent days had more to do with the market being oversold at the start of the week than a sign of strengthening fundamentals.

“I think it’s too early to declare victory. We don’t think anything has really changed. We continue to think investors will worry about the twin terrors of inflation and a slowing economy.”

Even amid concerns about the economy some corporate earnings remain strong. A string of strong profit reports this week from investment banks continued as Bear Stearns Cos. reported better-than-expected results . Reports from Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc. helped drive stocks higher in previous days. Bear Stearns was up $3.46 at $139.68. Lehman rose $1.98, or 2.83 percent, to $72.04, while Goldman rose $1.66 to $162.52.

General Electric Co. said it struck a deal to sell a majority stake in its advanced materials unit to private investment group Apollo Management LP in a deal it valued at $3.8 billion. The conglomerate said it plans to use expected proceeds of about $2 billion to restructure its industrial business. GE was down 6 cents at $34.78.

Blue chips came under pressure however after UBS, the investment bank, lowered its rating on GE and Boeing Co. UBS cut its rating on GE to “neutral” from “buy” and reduced its call on Boeing to “reduce” from “neutral.” Boeing was down $1.31 at $75.01.

The Russell 2000 index of smaller companies was down 3.10, or 0.42 percent, at 727.60.

Declining issues outnumbered advancers by about 2 to 1 on the New York Stock Exchange, where volume came to 1.47 billion shares, compared with 1.67 billion traded Wednesday.

Overseas, Japan’s Nikkei stock average rose 1.22 percent. Britain’s FTSE 100 closed down 0.25 percent, Germany’s DAX index was up 0.02 percent, and France’s CAC-40 was off 0.27 percent.

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