Stocks extended a modest rebound from Tuesday's selloff, but a sharper rally faltered yesterday as Japan's new leader failed to impress investors with his plans to stimulate that nation's economy.

The Dow Jones industrial average finished 20.34 points - or 0.2% - higher at 8,598.02.

The Standard and Poor's 500 fell 0.18 to 1,089.45, and the Nasdaq composite index rose 17.26 to 1,846.77. Advancing issues outnumbered decliners by a two-to-one margin on the New York Stock Exchange, with 2,002 up, 996 down and 528 unchanged.

The NYSE composite index rose 1.70 to 549.50, and the American Stock Exchange composite index rose 7.12 to 684.07.