Some selling had been expected following the big advance a day earlier, and analysts said the absence of vigorous buying did not mean stock prices, which have been gradually moving higher since late 2003, were losing momentum.

"What you’re seeing is a slight pause in what is still an upwardly biased market," said Brian Bush, director of equity research at Stephens Inc. "And I expect to see more upside."

The Dow Jones industrial average closed down 5.41 at 10,538.66, according to preliminary calculations, maintaining nearly all of yesterday’s 134-point surge that led it to its highest close since March 2002.

The market’s broader indicators were higher.

The Nasdaq composite index closed up 10.01, or 0.5 percent, at 2,057.37. That added to yesterday’s 2 percent gain, and was the index’s highest close since Jan. 4, 2002.

The Standard & Poor’s 500 index rose 1.45 to 1,123.67.

The market shrugged off a Commerce Department report of a 1.4 percent decline in November in orders to U.S. factories. It was the biggest setback for orders in seven months, but analysts discounted the numbers as a blip in a generally improving economic outlook.

Brian Williamson, an equity trader at the Boston Company Asset Management, said investors are now focused on the future, and identifying the next catalysts for a rally. He said Wall Street will be watching new job data and retail sales figures expected later this week. After that, the attention is likely to be on how many companies warn of earnings disappointments or revise fourth-quarter forecasts upward ahead of actual reports later this month.

"We need to see more positive stories from companies, we need to see the shape of the economy improving," Williamson said. "In order to keep this going, we’re going to need good jobs numbers, good figures from retailers and good earnings."

Sun Microsystems closed up 33 cents, or 7 percent, at $5.03 on an encouraging research note from Merrill Lynch about the computer-and-software maker.

Shares of Gateway Inc. fell 64 cents to $4.34 a day after the computer company reduced its fourth-quarter revenue forecasts because of low inventory on some products and pricing competition among PC makers.

Other computer makers also pulled back, including Dell Inc., which dropped 16 cents to $35.06.

U.S. automakers slipped a day after reporting they had lost more ground to foreign car makers during 2003. General Motors Corp. dropped 33 cents at $54.26, and Ford Motor Co. lost 5 cents to $16.54.

Also today, the dollar sank to a new low against the euro and was lower against most other key currencies in European trading.

The weakening dollar is another potential pressure, because it makes investing in U.S. stocks less attractive to foreign investors, who stand to lose money if the dollar further depreciates.

"At some point, the decline in the dollar will become problematic for the overall economy and the market. I donât think we are to those levels yet, though," Bush, the Stephens Inc. analyst, said. "Right now, there are more positive implications primarily for U.S. manufacturers" whose prices become more competitive overseas in a weak-dollar environment.

Advancing issues narrowly led decliners on the New York Stock Exchange, where volume was moderate.