With no new economic data and little corporate news, stocks drifted narrowly in and out of positive territory. Despite the day's modest losses, the markets were expected to extend their yearend rally into January, if not further.

The fourth-quarter surge in the markets — moving from 2004 lows in October to 3 1/2-year highs in the past two weeks — salvaged the markets' returns for the year. While the year's gains paled in comparison to 2003's double-digit returns, the post-election rally pushed the major indexes to high single-digit returns.

"When you look at it, it's astounding to get the kind of performance we had this year when you think about the negative effects of the bubble bursting from the '90s, the various corporate shenanigans we had, the rise in energy prices," said Joseph Battipaglia, chief investment officer at Ryan Beck & Co. "The year's been very consistent with what we've seen in the second year of an economic recovery, and the growth we've seen is pretty good, all things considered."

In early afternoon trading, the Dow Jones industrial average fell 5.54, or 0.05 percent, to 10,794.76.

Broader stock indicators were narrowly lower. The Standard & Poor's 500 index was down 0.72, or 0.1 percent, at 1,212.83, and the Nasdaq composite index slipped 0.08, or 0.05 percent, to 2,178.26.

This year's returns were even more welcome considering the sharp rise in crude oil prices, which topped $55 per barrel earlier this year before falling through November and December. Crude futures closed yesterday at $43.45 per barrel, down 19 cents, on the New York Mercantile Exchange, which was closed today.

Pharmaceutical stocks were one of the few areas of focus today. According to media reports, Eli Lilly & Co. hid reports that its popular antidepressant Prozac could cause behavioral problems. Eli Lilly dropped 79 cents to $56.71 on the news.

Embattled drugmaker Pfizer Inc. received good news from the U.S. Food and Drug Administration, which approved its drug Lyrica for neuropathic pain. Nonetheless, Pfizer was down 10 cents at $26.91.

General Electric Co. slipped 9 cents to $36.51 after it reiterated its previous earnings forecasts for the fourth quarter and 2004. The conglomerate also said it completed a deal to sell its international capital financing division for $500 million. GE retains a 40 percent stake in the division.

Advancing issues barely outnumbered decliners on the New York Stock Exchange, where volume came to 288.32 million shares, compared with 352.31 million at the same point yesterday.

The Russell 2000 index of smaller companies was down 0.10, or 0.02 percent, at 652.96.