Stocks fell back Wednesday as wary investors collected profits from Wall Street's first two-day advance since the Sept. 11 terrorist attacks.
Analysts said the retreat was to be expected, given the week's earlier gains and the troubled economy.
"Obviously we've had some slippage, but if we compare where we are today to where we were last week . . . this isn't a significant sell-off," said Michael Strauss, managing director at Commonfund. "The economy continues to be the battleground, and we're getting some weakness associated with the terrorist attacks."
The Dow Jones industrial average fell 92.58 points, or 1.1%, to 8,567.39, giving back nearly a quarter of its 424-point advance of Monday and Tuesday.
The Nasdaq composite index slid 37.60 points, or 2.5%, to 1,464.04, while the broader Standard & Poor's 500 index was down 5.23 points, or 0.5%, at 1,007.04.
Losers outnumbered winners by a slim margin on the New York Stock Exchange, and by a wider 11-to-7 margin on Nasdaq. Trading was active, although below last week's record levels.
Many on Wall Street are hesitant to make any big commitments until they have a better idea of the form and timing of U.S. retaliation for the assaults on the Pentagon and World Trade Center.
"You don't know what might happen Saturday, if that might be when retaliation or something happens, and how that will affect the market," said Chris Wolfe, equity market strategist for J.P. Morgan Private Bank. "So you don't want to take many chances."
Those concerns, as well as profit taking from Monday's big rally that sent the Dow up 368 points, appeared to drive much of Wednesday's trading.
Among tech stocks, IBM dropped $3.15 to $91.30 and Sun Microsystems fell 25 cents to $8.44. Goldman Sachs cut earnings estimates for both companies on fears they will lose business in the wake of the attacks.
Stock reaction to the economic fallout wasn't all negative.
Delta Air Lines gained 34 cents to $24.86 on news of 13,000 job cuts--about 15% of its work force--because of declining air travel following the terrorist attacks.
Other light buying was concentrated in sectors considered less risky in times of uncertainty, including pharmaceuticals and consumer goods. Johnson & Johnson rose $1.19 to $54.13, while Procter & Gamble climbed 13 cents to $71.13.
"Are you going to change your food consumption or amount of shampoo you buy because of the economy? No," Strauss said. "But you might change your mind about luxury items."
Poor earnings reports also drove selling. Micron Technology plummeted $3.99, or 19%, to $17.25, after reporting a fourth-quarter loss that was double what analysts were expecting.
Market watchers attributed some of the market's losses to the usual end-of-quarter trading by fund managers seeking to adjust their portfolios. The third quarter ends Sunday.
The market appeared to be more stable than it was last week, when the Dow fell 1,369 points, its worst weekly performance since the Depression. Although analysts agree more tough times are ahead for the markets, there is some optimism.
"This is a difficult environment and it would be difficult for the market to put together several days of advance," said Robert Streed, portfolio manager at Northern Select Equity Fund. "Still, I think there's a very high probability that a month from now we'll be higher."
In other market action:
* U.S. Treasury yields fell as investors sought safe havens. The yield on the benchmark 10-year Treasury note fell to 4.63% from 4.70% Tuesday. Meanwhile, demand was strong for the U.S. Treasury's auction of $17 billion in two-year debt. The yield was 2.869%, below the average predicted by bond firms polled by Bloomberg News.
* Gold rose $2.80 to $293.30 an ounce in New York trading, its highest level since early last year. Gold mining stocks rose as well. Barrick Gold was up $1.02 to $17.34, and Newmont Mining gained $1.43 to $23.37. Gold has risen 7.7% since the attacks.
Market Roundup, C5, C6