Stocks trimmed their gains and blue chips retreated into negative territory Wednesday as investors weighed a new batch of gloomy corporate news against hopes the Federal Reserve's aggressive rate cut stance can help spur a rebound.

The Dow Jones industrial average slipped 36.75 points, or 0.38 percent, to 9,554.37. At its session high of 9,644.12, the blue-chip index had erased all of its post-Sept. 11 losses.

The technology-packed Nasdaq Composite Index, buffeted early in the session by disappointing results and a discouraging forecast from wireless telecommunications firm Qualcomm, finished with a gain of 2.45 points, or 0.13 percent, at 1,837.53.

The broader Standard & Poor's 500 Index fell 3.06 points, or 0.27 percent, to 1,115.80.

"You get these fights with the bulls and the bears," said James Volk, co-director of institutional trading at D.A. Davidson & Co. "There are a number of people that are bullish about the economy turning around ... and there's another group that think there's no reason for this buoyancy in the market because its still way, way premature."

The market made a run for the highs of the day in choppy early afternoon trading, building on a rally in the previous session when the Fed sent stocks soaring with its 10th interest-rate cut so far this year.

"The Fed gave the market what it wanted," said Charles White, president of investment firm Avatar Associates, adding that the market's ability to reclaim the losses it took in the wake of the Sept. 11 attacks has given investors encouragement.

Shares of Hewlett-Packard Co. dragged on the Dow after HP and Compaq Computer Corp. stood firm on their plans for a $21 billion merger, even as pressure mounted from Hewlett and Packard family members to cancel the deal.

Hewlett shares slipped 63 cents to $19.18. The stock gained more than 17 percent Tuesday after the founding Hewlett family, which has a stake of more than 5 percent in Hewlett-Packard, said it would vote against the deal. Compaq's stock sagged 51 cents to $7.99.

Energy trader Enron Corp. was badly beaten yet again, plunging to a 10-year low of $7 amid concerns about its ability to raise cash. Late in the day it got a boost from a Wall Street Journal report that rival Dynegy Inc. is in talks to infuse about $2 billion into the struggling company. Enron ended down 62 cents at $9.05.

Interest-rate-sensitive financial stocks like J.P. Morgan Chase , up $1.05 at $38.59, and American Express Co. , up $1.12 at $31.68, underpinned the blue-chip Dow.

Stocks have surged in recent weeks as investors put aside their current economic woes, hopeful that the Fed's rate reductions and a hefty fiscal stimulus package can help the economy spring back by the middle of next year.

Investors got encouragement from the latest key economic report, which showed productivity rose more strongly than expected in the third quarter as firms cut workers' hours at the fastest pace in 10 years. The government data suggested companies are adjusting to the slowdown in economic growth.

"Any time productivity is up, that's good news for the market," said Robert Baur, chief economist for Invista Capital Management, which oversees $24 billion in equities.

Wireless-related stocks were buffeted after Qualcomm, which holds the patent for a popular cellular technology, reported earnings that missed forecasts. It also said profits for the current fiscal year would be at the low end of already reduced estimates, citing the global economic slowdown.

Nevertheless, Qualcomm still managed to erase its early loss to gain 38 cents to $55.11. The American-traded shares of Swedish mobile phone giant Ericsson slipped 16 cents to $4.73, while the shares of Finnish rival Nokia dropped 86 cents to $22.20.

Heavyweights like networking giant Cisco Systems also underpinned the Nasdaq market. Cisco gained 46 cents to $18.93.

The market will likely remain rangebound in the very near future as investors search for solid evidence that a recovery is at hand, analysts said.

"It's usually a time when traders tend to take their gains, because there's nothing left for the short term to look forward to," said A.C. Moore, chief investment strategist at Dunvegan Associates.

One bright spot was America's No. 1 trash hauler Waste Management Inc. , which posted a net profit, due in part to lower costs and interest expenses, even after taking a charge to settle the last of a series of class-action lawsuits. It jumped $1.63 to $26.98.

Shares of Lands' End Inc. were also hot, racing up almost 18 percent, or $6.41 to $42.15, after the Internet and catalog retailer posted quarterly results that handily beat Wall Street forecasts on effective cost controls and solid sales of full-priced merchandise.

Advancing issues barely outnumbered decliners 16 to 15 on the New York Stock Exchange. Volume came to 1.41 billion shares, ahead of Tuesday's 1.34 billion shares.

The Russell 2000 index, the barometer of smaller company stocks, fell 1.98, or 0.5 percent, to 440.80.

Qualcomm's poor results triggered selling of major tech shares in Japan. The benchmark Nikkei average fell 3.28 percent or 348.74 points to 10,284.98, its lowest close since Oct. 10.

Germany's DAX index advanced 3.3 percent, France's CAC-40 rose 0.7 percent, and Britain's FT-SE 100 finished unchanged.

Reuters and the Associated Press contributed to this report.