The broader market also fell. The Nasdaq composite index fell 2.92 or 0.2 percent, to 1,766.96. The Standard & Poor's 500 index was essentially unchanged, off 0.05 to 1,109.38.

Analysts said the market, which has been characterized by ups and downs for weeks, had been poised for more uncertainty regardless of the news on consumer confidence.

"We've been now for 61/2 weeks in a range-bound correction," said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. in St. Louis. "The problem today is we were subject to some profit-taking, and that was going to happen good news, bad news or no news."

The news today was in an announcement by the Conference Board that its Consumer Confidence Index fell to 94.1 this month from a revised 97.8 in January. Analysts had expected a reading of 97.

The decline, reversing two consecutive monthly gains, reflects increasing pessimism about the job outlook and the economy.

Analysts said the dropoff in stock prices grew out of concerns that consumers, whose spending has been largely responsible for lifting the battered economy, might be wearing down. But as investors studied the report, those concerns eased somewhat.

"Anyone can point to this statistic and say 'Here's the consumer, starting to give ground,' " said Joseph V. Battipaglia, chief investment strategist at Gruntal & Co. in New York. "That would spook the market and that's what we see playing out here."

In addition to the consumer confidence report, analysts attributed the market's morning drop to a rumor, quickly denied by the Pentagon, that the United States had ground troops in Iraq.

Investors are obsessing less about Enron and other corporate controversies and focusing more on improving earnings and economic news, said Arthur Hogan, chief market analyst at Jefferies & Co.

Several companies reporting earnings today fit that pattern.

Federated Department Stores rose $2.64 to $41.66 after it raised its estimates for earnings for the year. But shares of fellow retailer Home Depot were down 56 cents to $51.51, after it reported earnings that slightly exceeded expectations.

Appliance maker Whirlpool saw its shares rise $5.15 to $73.40 after it bolstered its estimate for first-quarter earnings, putting it ahead of estimates by analysts.

Hewlett-Packard rose 3 cents to $20.01 after one of its larger shareholders, Brandes Investments, reportedly said it would oppose its merger with Compaq Computer. Compaq was down 20 cents to $10.40.

Advancing issues outnumbered decliners by an 11-to-8 ratio on the New York Stock Exchange, where volume came to 1.29 billion shares, compared with 1.33 billion yesterday.

The Russell 2000 index, the barometer of smaller company stocks, rose 3.10, or 0.7 percent, to 471.29.