NEW YORK — Investors worried about a drawn-out war with Iraq sold stocks lower for the third straight day Friday, snapping Wall Street's two-week winning streak. But analysts, characterizing the selling as moderate, said the market was holding up well despite the uncertainty.
There were more advancers than decliners on the New York Stock Exchange, a sign that investors, while concerned, are far from panicky.
The Dow Jones industrial average has held on to more than half the 997 points it gained in the six days leading up to the war and the two sessions that followed the start of fighting.
"The rally we saw a week or so ago does show that there is a desire to be back in stocks," said Susan L. Malley, chief investment officer for Malley Associates Capital Management, adding that her firm is "not ready to pour money back into stocks yet, but we have put a little more into equities than we had before the war."
The Dow closed down 55.68, or 0.7 percent, at 8,145.77, incurring a three-day loss of 134.46. For the week, the blue chips lost 4.4 percent.
The broader market also retreated for a third day and for the week overall. On Friday, the Nasdaq composite index fell 14.65, or 1.1 percent, to 1,369.60. The Standard & Poor's 500 index declined 5.02, or 0.6 percent, to 863.50.
For the week, the Nasdaq gave back 3.7 percent and the S&P forfeited 3.6 percent.
Investors have been collecting profits this week from the prewar rally, but the Dow has retained about 555 points, or nearly 56 percent, of its 997-point advance.
Fears that the fighting in Iraq will last longer than investors anticipated have been responsible for this week's selling, although their effect has waned as the market's losses moderated. Wall Street is concerned that the longer the war takes, the more cautious consumers and businesses will become.
Economic news contributed to Friday's declines. The Commerce Department reported consumer spending was flat for a second
straight month in February as people clamped down amid job and war worries and higher energy prices.
Investors are particularly sensitive to news about consumer spending, which accounts for two-thirds of the economy, although Friday's reading was better than the 0.2 percent decline economists forecast.
Also, the University of Michigan's consumer sentiment index for March fell to 77.6 from 79.9, according to Dow Jones Newswires. Still, economists were expecting war worries to erode sentiment further.
Analysts were heartened to see the market hold up fairly well in the face of war uncertainty and lackluster economic news. Some believe investors are becoming cautiously optimistic about the market and the economy, enough to make some bets.
"Investors are looking through the current war-related concerns to what might be in store (later this year)," said Charles G. Crane, strategist for Victory SBSF Capital Management. "Assuming that (war) doesn't take several months . . . what I see is an economy that is in satisfactory condition, not great, and prospects for single-digit earnings growth in 2003 and 2004." On Friday, Barr Laboratories fell $1.48 to $56.32 after Merrill Lynch downgraded it to "neutral" from "buy."
British Airways declined 88 cents to $17.27 after J.P. Morgan cut its earnings outlook on the company.
UAL Corp., parent of United Airlines, rose a penny to 85 cents a day after pilots tentatively agreed to concessions that trim labor costs by $1.1 billion a year. Late Friday, the NYSE announced it was delisting shares of UAL, effective April 3, for failing to meet its minimum share price standards. UAL has been reorganizing under Chapter 11 bankruptcy protection since December.
Dell Computer slipped 14 cents to $27.70 ahead of a meeting next week with equity analysts.
Avon Products climbed $1.35 to $56.90 after raising its first-quarter profit estimate.
BJ's Wholesale Club rose 44 cents to $11.50 after Jefferies & Co. upgraded the retailer to "hold" from "underperform."
Advancing issues managed to claim a narrow, 14-to-13 lead over decliners on the NYSE. Trading volume was again light, as it was in the weeks leading up to the war and since fighting began on March 19. Consolidated volume totaled 1.51 billion shares, unchanged from Thursday.
The Russell 2000 index, which tracks smaller company stocks, fell 0.80, or 0.2 percent, to 368.70.
Overseas, Japan's Nikkei stock average finished Friday down 1.1 percent. In Europe, France's CAC-40 rose 0.4 percent, Britain's FTSE 100 lost 0.6 percent and Germany's DAX index dropped 2.5 percent.