The Dow Jones industrials fell as much as 89 points before recovering most of that drop. Analysts said the late-day gains were heartening since many were expecting bigger declines following the Dow's eight-week winning streak.

"We had two or three jolts here that could have resulted in more profit-taking than we had," said Bill Barker, investment strategy consultant at RBC Dain Rauscher. "It's obvious that market sentiment has changed in the last few months, and investors are more positive about their outlook for 2003."

The Dow slipped 5.15, or 0.1 percent, to close at 8,737.78, according to preliminary calculations, having fallen 188 points in the previous three days.

The broader market also finished lower. The Nasdaq composite index fell 18.90, or 1.3 percent, to 1,430.06. The Standard & Poor's 500 index declined 3.22, or 0.4 percent, to 917.53.

Disney fell 86 cents to $17.68 after the entertainment company lowered its fourth-quarter earnings estimate, citing weak ticket sales for its latest animated film, "Treasure Planet."

Hewlett-Packard dropped 86 cents to $18.37 after the computer maker said 2003 revenue should rise 2 percent to 4 percent from 2000, lower than its previous forecast.

Analysts say that while investors have been more upbeat about the economy, leading to eight weeks of blue-chip gains, the market is seeing some declines as investors also worry about a war with Iraq and the strength of corporate profits.

"The advance we've seen in stocks over this brief period has probably outpaced the improvement in underlying fundamentals of the companies" issuing outlook warnings, said Charles G. Crane, strategist for Victory SBSF Capital Management.

Still, he added, "the fact that we had a little bit of a pause after eight weeks of superlative performance should come as no great shock to market observers."

Investors largely shrugged off two encouraging economic reports today.

The Labor Department reported that productivity grew at an annual rate of 5.1 percent in the third quarter, faster than the government's previous estimate of 4 percent. Analysts were expecting smaller growth of 4.5 percent.

And the Commerce Department said orders to U.S. factories rose 1.5 percent in October, the first gain in three months, offering hope for the nation's manufacturers who are trying to shake off a late-summer slump.

Federated Department Stores fell 73 cents to $31.25 after the retailer said November sales at stores open at least a year fell 7.4 percent.