The declines, which erased an early advance, signaled that investors are pacing themselves and waiting for more earnings results. Analysts said investors are also mindful of the ongoing possibility of war with Iraq.

"We have a lot more to go. There is a lot more of the (earnings) reporting season ahead of us. The market is just going to crank its way through the next three or four weeks," said Tony Cecin, director of institutional trading at US Bancorp Piper Jaffray in Minneapolis.

After gaining as much as 82.34 points earlier, the Dow Jones industrial average closed down 25.03, or 0.3 percent, at 8,698.15. Yesterday, the Dow dropped 119.44 on a mixed earnings report from Intel and a reduced outlook from DuPont.

The market's broader gauges also retreated. The Nasdaq composite index fell 14.84 to 1,423.96. The Standard & Poor's 500 index declined 3.59 to 914.63.

While investors were circumspect, analysts said there are reasons for them to be encouraged about the market.

"You are seeing signs of positive momentum in the marketplace," Cecin said. "You are seeing more companies report better numbers even if they continue to be cautious in the near term. Inflation is nonexistent. I see good footing for the market in '03. ... I think it will be a good market, not a great market."

Among today's losers, Microsoft declined 81 cents to $55.46 ahead of its fiscal second-quarter earnings report due out after the close of regular trading.

IBM fell $1.54 to $86.05 ahead of its fourth-quarter results also due out later. After the market closed, IBM reported earnings that beat analysts' expectations by 4 cents a share, and its stock rose 5 cents in the extended-hours trading session.

Analysts attributed Wall Street's skittishness today to recent earnings reports that confounded investors.

"The earnings have been kind of mixed. Like Intel's earnings were good, but they said their capital spending would be down. So that put a drag on the market," said Barry Berman, head trader for Robert W. Baird & Co. in Milwaukee.

On Tuesday, Dow industrial Intel reported better-than-expected earnings but also said it is reducing capital spending this year by roughly $1 billion. The chip maker traded lower today, down 15 cents at $17.20, adding to yesterday's 44-cent loss.

News was also mixed on Yahoo!, which late yesterday posted quarterly earnings of 8 cents a share, surpassing analysts' forecast for a 6-cent profit and beating last year's 2-cent loss. But today, Credit Suisse First Boston downgraded Yahoo on concerns the stock was overvalued, and the Internet company fell 83 cents to $18.75.

But some earnings results helped stave off larger declines. Sears climbed $1.88 to $28.58 after posting fourth-quarter profits that beat analysts' expectations by 20 cents a share.

United Technologies, another Dow stock, soared $1.81 to $66.21 on earnings that exceeded Wall Street's estimates by 2 cents a share.

Advancing issues managed to claim a narrow lead over decliners on the New York Stock Exchange where volume was light at 1.48 billion shares, ahead of yesterday's 1.39 billion.

The Russell 2000 index, which tracks smaller company stocks, fell 0.65, or 0.2 percent, to 394.88.